Build to Rent Developments in New Zealand
The Build to Rent (BTR) model, well-received internationally, involves investors constructing apartments exclusively for renting, which means they cannot be sold, and tenants cannot be evicted. Situated opposite Auckland's Sylvia Park, this new development will provide tenants with the freedom of renting while offering the security typically associated with owning a home.
New Zealand is seeing a surge in BTR developments, driven by various factors including increased demand for rental housing and changes in regulations. The government's move to allow foreign investment in BTR is expected to further boost the market.
First Mover: Kiwi Property Build to Rent
Kiwi Property has announced the commencement of New Zealand's inaugural major build-to-rent project, signaling a significant advancement in the company's mixed-use strategy. The 295-apartment complex, situated at Sylvia Park in Auckland, will accelerate the transformation of the site into an integrated retail, office, and residential community.
The company's ability to develop build-to-rent projects on its own land helps mitigate initial costs and enhances potential returns. By leveraging existing asset management, security, and maintenance infrastructure at its mixed-use properties, Kiwi Property aims to achieve greater operational efficiency and economies of scale.
Kiwi Property has outlined a clear pathway for expansion in the build-to-rent sector. As part of the Sylvia Park masterplan, around 1,200 apartments could be constructed across the site in the medium term, establishing the area as a significant residential center. Additionally, resource consent is being sought for a 25-story mixed-use building at Auckland's LynnMall, comprising 245 build-to-rent apartments, three office floors, and ground-floor retail. The location has the potential to accommodate over 600 apartments in the future. Further details on the LynnMall mixed-use development will be shared once a decision is made to proceed with the project.
Build to Rent housing, like the new Resido development that I opened today, is an important part of solving New Zealand’s housing crisis.
— Christopher Luxon (@chrisluxonmp) June 11, 2024
Build to Rent is where housing is developed to be rented long-term rather than sold individually. pic.twitter.com/yXawq79089
New Rules Allowing Foreign Investment
To provide the necessary certainty for both small and large-scale investment in build-to-rent, the Overseas Investment Office issued guidance in March 2022 regarding the application of the Overseas Investment Act 2005 to build-to-rent developments.
The New Zealand government is set to introduce new rules that will allow foreign investment in BTR projects. This move is aimed at attracting more international capital into the country's rental market, which has been facing a shortage of affordable housing options.
The changes are part of a broader effort to address the housing crisis in New Zealand and provide more rental housing options for residents. The government believes that allowing foreign investment in BTR will help increase the supply of rental properties and improve affordability for tenants.
Industry experts and analysts are optimistic about the future of BTR investment in New Zealand. According to a report by XYZ, the demand for rental housing is expected to remain strong, driven by factors such as population growth and changing lifestyle preferences.
Experts believe that BTR developments offer a viable long-term investment opportunity, providing steady rental income and potential capital appreciation. The increasing interest from both local and international investors indicates a growing confidence in the sector.