bringing build-to-rent to canberra

Bringing Build-to-Rent to Canberra

MARKET SOUNDING

Creating great places where communities thrive

Suburban Land Agency I Build-To-Rent 2021

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Ngunnawal Country

We acknowledge the Ngunnawal people as Canberra’s first inhabitants and Traditional Custodians. We recognise the special relationship and connection that Ngunnawal people have with this Country.

Prior to the displacement of Ngunnawal people from their land, they were a thriving people whose life and culture was connected unequivocally to this land in a way that only they understand and know and is core to their physical and spiritual being. The segregation of the Ngunnawal people from Culture and Country has had long-lasting, profound, and ongoing health and well-being effects on their life,

cultural practices, families, and continuation of their law/lore. We acknowledge the historic interruption of the Ngunnawal people of Canberra and their surrounding regions.

We recognise the significant contribution the Ngunnawal people have played in caring for Country. For time immemorial they have maintained a tangible and intangible cultural, social, environmental, spiritual, and economic connection to these lands and waters.

Bringing Build-to-Rent to Canberra

Our city is a great place to live, work and play, but we know that we can provide more choice when it comes to the type of homes we have available.

We know that the Build-to-Rent model has potential to improve the rental market by delivering a large number of rental properties and providing housing alternatives. Canberra offers the perfect opportunity for Build-to-Rent, with low vacancy rates, high rents and a stable workforce.

We are looking for feedback and registrations of interest to work with us to deliver Build-to-Rent properties, including affordable rental, in Canberra.

Market Sounding Closes and Responses Due

Investment Decision and Potential Sales

Process

Market Sounding Opens with Registrations of

Interest

Industry Briefing

10 November 2021 25 November 2021 10 December 2021 Mid-Late 2022

HOW DO I RESPOND?The ACT Government is seeking ideas and innovative solutions for how Build-to-Rent developments could be built in the ACT.

We’ve identified some key questions for you to answer. It is not mandatory to answer all the questions, but please give as much feedback as you can.

There is also an opportunity for you to attend an industry briefing on 25 November 2021 and register your interest in any future land sales for Build-to-Rent projects.

Please respond to the questions located at suburbanland.act.gov.au/en/build-to-rent using the response form provided.

Interested in hearing more about Build-to-Rent releases? Please register your interest by subscribing to the Suburban Land Agency mailing list here suburbanland.act.gov.au/en/subscribe.

http://suburbanland.act.gov.au/en/build-to-rent

https://suburbanland.act.gov.au/en/subscribe


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At the Suburban Land Agency, we are hoping to grow the range of available housing options for Canberrans. Our city has a diverse community and we know that we can provide a wider range of choices when it comes to the type of homes we have available.

Build-to-Rent is an asset class which is typically:• owned long-term by a single owner, usually an

institutional investor, with the goal of generating steady long-term income

• designed with high quality common spaces and homes plus extra services for residents, to encourage homes to be rented quickly and occupied for longer, to support income generation

Not all Build-to-Rent developments include affordable or social housing. Some are only market-rate rental housing.In Canberra, we are interested in Build-to-Rent developments with both market and affordable rental.

Build-to-Rent is emerging in Australia. We know that this type of housing can:• establish rental homes which are high quality,

great places to live• offer longer periods of tenure for renters, providing

greater security• include affordable rental options• offer long-term, steady revenue generation for the ownerThrough this market sounding process, we are seeking feedback and interest from industry and the community housing sector to participate in the delivery of Build-to-Rent in Canberra. We have identified a site in Turner for our first Build-to-Rent project, along with a future site in Lawson and a potential pipeline of future projects. However, before we release any sites for sale we want to ensure the process is as collaborative and successful as possible. This stage will hopefully help us gain a better understanding of what you need from us.

Aerial view over Lawson Stage 2

What is Build-to-Rent?

Suburban Land Agency I Build-To-Rent 2021 Creating great places where communities thrive

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We know that the Build-to-Rent model has potential to improve the rental market by delivering a large number of rental properties and providing a housing alternative to home ownership.The ACT currently has a very low residential rental vacancy rate and the highest average rents in Australia, which impacts affordability and creates barriers to accessing secure rental housing in the ACT.

By bringing Build-to-Rent to Canberra, we are looking to:• increase the number of private rental properties in the

ACT, particularly for the more affordable end of the rental market

• grow the number of affordable rental options available at less than 75% of market rent, predominantly targeted at households in the second income quintile (as defined by the ACT Housing Strategy)

• increase choice and housing diversity for renters, with homes that meet renters’ (rather than owners’) needs

• offer opportunities for renters to feel secure through long-term tenure arrangements, establish themselves as part of a community and personalise their homes

• support renters to reduce car use and increase active travel, for better health and environmental outcomes

• encourage the establishment and growth of the Build-to-Rent sector as a long-term property asset class in the ACT

We are looking for feedback and registrations of interest from those who:

• are interested in leading the Build-to-Rent market in Canberra

• have experience and expertise in the design, construction and delivery of Build-to-Rent projects or other large-scale residential developments with similar key features

• are experienced operators of Build-to-Rent developments in Australia or overseas

• interested in investing in or financing Build-to-Rent projects in the ACT

• can deliver a solution that meets the above objectives while offering the opportunity for innovation and improved rental experience

• are willing to partner with ACT Government and/or community housing partners

• are committed to better outcomes through quality design, energy efficiency, sustainability, affordability and customer service and are innovative, open minded and keen to be involved in delivering the Suburban Land Agency's first Build-to-Rent project by 2025

• can play a key role in enabling and/or supporting the Government through technical, regulatory, financial and other types of reforms

Through this process, we want to:

• understand the appetite for developing and operating Build-to-Rent properties in Canberra, that meet the ACT Government’s objectives

• identify what incentives, subsidies or other changes may be required to include an affordable rental component

• inform future land sales processes that could unlock development, facilitate construction and support local jobs

• identify opportunities for innovation in the design, construction, management and commercial structure of Build-to-Rent projects

The vision we're building Be part of the process

Looking across Northbourne Avenue to the Turner site from the Light Rail.


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WHY INVEST IN CANBERRA?Our city has so much to offer. Canberra has high rental yields, low vacancy rates, high median rents, high weekly household incomes, and a stable workforce – which combined make it the perfect opportunity for Build-to-Rent. The market fundamentals for the Canberra rental market are favourable when compared to Sydney and Melbourne.

Table 1: ACT Property Market Fundamentals

Market Characteristics Canberra Sydney Melbourne

Gross Rental Yield - Units 1 5.4% 3.3% 3.4%

Rental Vacancy 2 0.8% 2.6% 3.5%

Median Weekly Unit Rent3 $630 $550 $430

Average Weekly Earnings 4 $1,909 $1,764 $1,751

Unemployment Rate 5 4.1% 4.5% 4.5%1 https://sqmresearch.com.au/property-rental-yield.php?region=act-Canberra&type=c&t=1 2 https://sqmresearch.com.au/graph_vacancy.php?region=vic%3A%3AMelbourne&type=c&t=1 3 Domain Rent Report, June quarter 2021: https://www.domain.com.au/research/rental-report/june-2021/ 4 https://www.abs.gov.au/statistics/labour/earnings-and-work-hours/average-weekly-earnings-australia/may-2021#state-and-territory 5 Economic Indicator Summary, ACT - 14 October 2021 https://www.treasury.act.gov.au/snapshot

WHAT HAVE WE COMMITTED TO? We know there have already been some commitments made which relate to Build-to-Rent in Canberra:

• in the 2021—22 ACT Budget, there was a commitment to invite proposals to build and operate long-term rental accommodation on land release sites in Turner and Lawson

• in August 2020, economic stimulus measures were announced which included a commitment to design and pilot a Build-to-Rent project

• the ACT Housing Strategy sets out goals for growing rental supply and encouraging affordable rental, particularly for households in income quintile two

• the ACT’s Parliamentary and Governing Agreement for the 10th Legislative Assembly includes a commitment to boost the supply of affordable rental dwellings by 2025—26, along with a commitment to construct an affordable Build-to-Rent development on the site of Common Ground Gungahlin

WHAT HAVE WE ALREADY HEARD?We have already had some conversations with a few developers of Build-to-Rent, Community Housing Providers and superannuation funds, to understand how they work and what some potential barriers might be.We heard that:

• Canberra offers an attractive market for operating Build-to-Rent, particularly due to:• our population demographics,

including the public service workforce

• current supply of rental stock• low vacancy rates• rental growth• challenges in accessing home

ownership for parts of the population

• There are some potential barriers to operating Build-to-Rent here, including:• the amount of available

sites and demand for rental properties

• competing with Build-to-Sell developers for purchasing sites

• challenges with the financial viability of operating Build-to-Rent at affordable rates

• There are some solutions to these barriers, such as:• preparing a pipeline of sites

to be sold for Build-to-Rent developments

• selling sites only for Build-to-Rent use to reduce competition with Build-to-Sell development

• offering concessions to improve viability

• offering subsidies for the affordable rental component, as has been done in some other Australian jurisdictions like Queensland

DID YOU KNOW?

Rental vacancy rates have remained around 1% for the past ten years due to strong population growth, low unemployment, high average wages and a transient population.In 2017—18, over 42.7% of low-income rental households in the ACT were in rental stress, that is, paying more than 30% of their income on rent .

Assuming current rental demand continues, an increase in rental dwellings is required to address the ACT’s low vacancy rate and ensure low-income households are able to access suitable and affordable rental housing. Access to secure, suitable, and affordable housing improves social inclusion, health, wealth, and welfare.

Haig Park Markets in full swing

https://sqmresearch.com.au/property-rental-yield.php?region=act-Canberra&type=c&t=1

https://sqmresearch.com.au/graph_vacancy.php?region=vic%3A%3AMelbourne&type=c&t=1

https://www.domain.com.au/research/rental-report/june-2021/

https://www.abs.gov.au/statistics/labour/earnings-and-work-hours/average-weekly-earnings-australia/may-2021#state-and-territory

https://www.treasury.act.gov.au/snapshot

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We have identified some early opportunities which we are considering releasing for sale for Build-to-Rent developments:

Build-to-Rent Opportunities

TurnerLocated in an ideal position on Canberra’s gateway Northbourne Avenue, Block 2 Section 57 (Turner) is a CZ5 (mixed-use) site close to Civic with its shops and employment hubs. With easy access to Canberra’s light rail, the site is also only a 10 minute drive from the airport.

The Turner site will be subdivided into three equal blocks of approximately 7,700m2 in size. We propose to assign the northern block for release for Build-to-Rent.

> Indicative Site Location Map

Site: Block 2 Section 57 Turner

Land Size: 23,372m² (prior to subdivision)7,700m2 (approximately, post-subdivision)

Territory Plan Requirements: CZ5: Mixed Use. Permitted land uses under this zoning include hotel, residential, non-retail commercial use, parkland, restaurant, serviced apartment and shops. Additional requirements relating to building heights, setbacks and dwelling mix apply in accordance with the Northbourne Avenue Precinct Code and Draft Variation to the Territory Plan no. 368 (which is currently underway to implement the recommendations of the City and Gateway Framework).

National Capital Plan Requirements:

The site sits within the ‘City to Gateway Corridor’ under the National Capital Plan and requirements apply to the site relating to building height, setbacks, building length and landscaping.

Haig Park

Greenway Street

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Condamine Street

Block 2Section 57

Turner

CBD

Block 2Section 57Turner1.5km

Build-to-Rent Siteapprox.7700m2

Haig Park

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Offering great potential for Build-to-Rent that targets those looking to live and work in the Belconnen area, Lawson Stage 2 is located in Belconnen’s north east. It is bounded by the former Belconnen Naval Transmission Station to the north, the existing Lawson development (Stage 1) to the east, Ginninderra Drive to the south and Lake Ginninderra to the west.

This site is close to the University of Canberra (UC), the UC Hospital and the Belconnen Town Centre. We are still undertaking planning work on this development, so the exact location and size of a future Build-to-Rent development will be confirmed as part of this process. We will look to release a site to market for the purposes of Build-to-Rent once planning, subdivision and infrastructure works are further advanced.

Site: Lawson Stage 2 – block yet to be determined

Land Size: Yet to be determined

Territory Plan Requirements: To be confirmed, but likely to be CZ5: Mixed Use. Permitted land uses under this zoning include hotel, residential, non-retail commercial use, parkland, restaurant, serviced apartment and shop. Variation to the Territory Plan no. 299 changed the residential RZ1 suburban zone in Lawson Stage 2 to a range of urban zones.

National Capital Plan Requirements:

Nil

Lawson Stage 2

> Indicative Site Location Map

Ginninderra Drive

LakeGinninderra

View over lake Ginninderra towards Lawson Stage 2 and beyond to the Belconnen Town Centre


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We know that for Build-to-Rent to be successful in Canberra, we need to have multiple locations available. We are exploring other opportunities where sites may become available for Build-to-Rent in locations such as Belconnen, Gungahlin and Woden. Your feedback on the ideal features of Build-to-Rent sites will help us confirm these opportunities.

WHAT WE ARE LOOKING FOR?

The vision for a future Build-to-Rent development in Canberra includes:

• construction and operation of long-term rental accommodation as a Build-to-Rent development, for a minimum of 15 years, on ACT Government land release sites

• inclusion of at least 15% of the homes within the development to be made available as affordable rental (to eligible tenants, for less than 75% of market rent)

• requiring all units to be owned by one entity long-term and rented out, rather than being sold individually

• inclusion of shared amenities and other on-site services

• a range of different types of homes with different sizes and bedroom numbers, to suit different types of households, with affordable dwellings spread evenly throughout the development

• high quality building design, high liveability, inclusive, good accessibility, low environmental impact, good suitability for a changing climate and low cost of living for future residents.

We’d like your feedback on these items as well as any new or innovative ideas you might have about what would make Build-to-Rent more viable for you.

ELIGIBLE TENANTS

While the eligibility criteria for tenants will be confirmed, we’re proposing to use similar criteria to those which already exist for other ACT Government initiatives.

In 2021-22 a household is considered eligible if their household gross income is less than $100,000 per annum or less than the household composition income limits described below, whichever is greater:

We understand that investing in and developing a new asset class like Build-to-Rent, and delivering market and affordable rental, involves risk for participants. We would like to understand what assistance you might require from the ACT Government to help keep your project viable and manage the extra costs that might come with taking on extra risks, such as providing affordable rental to eligible tenants for less than 75% of market rent.

It is important to note that incentives, subsidies and tax concessions are not guaranteed at this stage.

The amount and type offered as part of future processes is likely to depend on how well they align with our policy aims – particularly the amount of affordable rental accommodation offered and the capacity to operate in the market over the long-term with limited ongoing assistance.

We are interested in hearing if there are any barriers within the ACT’s legislative, planning or regulatory frameworks that limit your ability to make a Build-to-Rent project viable, and achieve some of our goals for a liveable, sustainable and inclusive development that suits renters.

What do we need?

Future Locations


Household composition income limit

Household Composition Income Limit

First adult $52,795

First sole parent $55,530

Each additional adult $20,198

Each child $17,514


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Your feedback will be used to inform future decisions by the ACT Government and the Suburban Land Agency about releasing a site for sale for the purposes of Build-to-Rent.

We will be considering whether any of the incentives, subsidies, concessions, or any other great ideas you suggest, need further investigation or approval.

Once the ACT Government has agreed on its approach, we will aim to release a site for sale through a tender process. By registering your interest with us, we will get in touch with you about the next steps of the project.

What's next?

Looking across Canberra's light rail line towards the Turner site

Lake Ginninderra

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LIMITATIONS AND DISCLAIMERS

References in this document to ‘we’, ‘us’, ‘our’ and ‘ours’ refer to the Australian Capital Territory (Territory) and the Suburban Land Agency (Agency) acting on behalf of the Territory. References to ‘you’, ‘your’ and ‘yours’ refer to participants in the market sounding process. Any information provided by participants will be for general information and analysis and will be relied upon for the purpose of the land sales planning only. Market sounding is a pre-land sales process to inform the preferred land sales approach. Participation in the market sounding will not offer any advantage in any subsequent land sales process. Similarly, those not participating will not be disadvantaged in the future land sales process. All industry briefing materials will be made publicly available at the Agency website. The market sounding does not commit the Territory or the Agency to undertaking any future land sales or implementing any of the suggestions received from participants, and is not intended to bind the Territory or the Agency. All future land sales will be subject to future approval. All information supplied by the Territory or Agency is preliminary only and does not constitute the final land sales approach or material. Participants are recommended to seek independent legal and financial advice prior to making any offer to purchase land.

If English is not your first language and you require translation assistance, please phone the Translating Interpretive Service (TIS National) on 131 450.

GET IN TOUCH

Call the Suburban Land Agency reception on (02) 6205 0600

Email us at [email protected]

Reach us on Facebook or Twitter @suburbanland

FURTHER INFORMATION

Legislation

City Renewal Authority and Suburban Land Agency Act 2017 - https://www.legislation.act.gov.au/a/2017-12/

Planning and Development Act 2007 - https://www.legislation.act.gov.au/a/2007-24/

Territory Plan 2008 - https://www.planning.act.gov.au/planning-our-city/territory_plan

Renting and Occupancy Laws - https://justice.act.gov.au/renting-and-occupancy-laws

Strategies and policies

ACT Planning Strategy - https://www.planning.act.gov.au/act-planning-strategy

ACT Housing Strategy - https://www.act.gov.au/homes-housing/act-housing-strategy

Climate Change Strategy - https://www.environment.act.gov.au/cc/act-climate-change-strategy

Transport for Canberra Policy - https://www.transport.act.gov.au/about-us/planning-for-the-future/transport-for-canberra

Plans, programs and frameworks

National Capital Plan - https://www.nca.gov.au/planning-heritage/national-capital-plan

ACT Indicative Land Release Program (ILRP) - https://www.planning.act.gov.au/planning-our-city/land-release

City and Gateway Urban Design framework December 2018 - https://www.planning.act.gov.au/__data/assets/pdf_file/0005/1296986/CITY-AND-GATEWAY-Urban-Design-Framework.pdf

https://www.legislation.act.gov.au/a/2017-12/

https://www.legislation.act.gov.au/a/2007-24/

https://www.planning.act.gov.au/planning-our-city/territory_plan

https://justice.act.gov.au/renting-and-occupancy-laws

https://www.planning.act.gov.au/act-planning-strategy

https://www.act.gov.au/homes-housing/act-housing-strategy

https://www.environment.act.gov.au/cc/act-climate-change-strategy

https://www.transport.act.gov.au/about-us/planning-for-the-future/transport-for-canberra

https://www.nca.gov.au/planning-heritage/national-capital-plan

https://www.planning.act.gov.au/planning-our-city/land-release

https://www.planning.act.gov.au/__data/assets/pdf_file/0005/1296986/CITY-AND-GATEWAY-Urban-Design-Framework.pdf

bringing build-to-rent to canberra

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