Australia’s Build-to-Rent (BTR) sector is primed for a wave of new investment, with recent policy reforms paving the way for an influx of global capital.
Industry experts are predicting strong growth in 2025, driven by changing demographics, a tightening rental market, and fresh tax incentives.
We spoke with Colliers specialists to uncover how these reforms are reshaping the BTR landscape and creating new opportunities for investors.
BTR Gaining Momentum in Australia
BTR developments – purpose-built rental apartment blocks under single ownership - have traditionally been a niche segment in Australia.
Unlike in the UK and US, where institutional investors are central to housing supply, Australia’s rental market has relied on small-scale, individual landlords.
But that is changing.
JLL’s Build-to-Rent (BTR) Australia: Q2 2024 report reveals the national BTR pipeline has almost doubled in the past 18 months.
In 2024 alone, $2.84 billion flowed into the sector, matching the five-year annual average of $2 billion.
“While investment eased slightly in 2024 from the record $3.13 billion in 2023, the sector will continue attracting capital,” said Robert Papaleo, Colliers’ National Director of residential capital markets.
“Structural and demographic trends are driving demand, and supportive policy changes will enhance market liquidity.”
Policy Reforms Encourage International Capital
One of the biggest catalysts for BTR’s anticipated growth is the Australian Government’s recent tax reforms, designed to attract foreign investment.
Key changes include:
- Higher capital works deductions, up from 2.5% to 4% for new BTR developments
- Lower withholding tax rate, down from 30% to 15% for eligible foreign investors
- 30-year incentives for projects meeting affordability and tenure criteria
Mr Papaleo believes these reforms represent a turning point for the industry, boosting Australia’s competitiveness on the global stage.
“While capital deployed into BTR has overwhelmingly originated from international institutional investors, the managers have typically been locally based,” he said.
“However, this situation is changing, with a greater participation of overseas managers now driving new investment - a trend likely to be accelerated by the support of these recent policy changes.”
A Pivotal Year Ahead
With greater regulatory certainty and strong demand fundamentals, 2025 could be a breakthrough year for BTR investment, according to Mr Papaleo.
“Moving forward, institutional investment will continue to be the primary driver of supply,” he said.
“But with fewer barriers to foreign capital, we’re likely to see the sector gain real scale and maturity in the years ahead.”
Beyond the policy shifts, population growth, affordability pressures, and the demand for flexible rental options will likely sustain BTR momentum long term.
As the sector matures, its ability to address these trends will become increasingly important, said Colliers Associate Director of Research, Jonathan Mayes, who sees BTR playing a key role in tackling Australia’s housing shortage.
“BTR and the related Living segments of PBSA, Co-living, and Land Lease Communities (LLC) will be critical not only in delivering new supply but also in offering greater choice and diversity within the context of today’s housing challenges,” he said.
