APAC Living Investor Survey: Spotlight on Australia

Where do the priorities lie?

Australia and New Zealand ranked first among preferred investment destinations in our APAC Living Investor Survey. The appeal extends beyond domestic capital. Excluding Australian respondents has little impact on the regional preference score.

Living also leads on asset class. Diversified respondents ranked Living first for Australian deployment, ahead of Industrial and Logistics and then Office. Just over half of diversified respondents rank Living top.

Which Australian Living sub-sectors do investors target?

Investors are taking a broad position. Three-quarters target at least two sub-sectors and 52% target three or more.

PBSA is the most targeted sub-sector, followed by co-living, and Build-to-Rent (BTR). The breadth reflects more flexible operating models and less distinct boundaries between sectors, with co-living increasingly combined with PBSA and BTR

Where do investors want to invest, and does it match existing stock?

Sydney is in scope for every respondent, yet Melbourne holds the largest share of completed BTR and off-campus PBSA.

Building exposure in Sydney and Brisbane is likely to depend substantially on new supply, which makes development feasibility central to the outlook. Our Cost to Build analysis shows Sydney has the strongest relative feasibility position of any capital city, while Brisbane is more stretched.

What are the barriers to investing in Australian Living?

Feasibility of schemes is the biggest barrier, cited by 40% of respondents. Planning approvals and complexity follow at 28%, with state tax structures and a lack of investable stock also named.

These barriers are connected. Prolonged approvals increase holding costs and exposure to construction cost escalation, while tax settings affect the income investors retain.

What are the routes to market?

Investors are open to several routes:

• Distressed opportunities and recapitalisations
• Development joint ventures
• Stabilised acquisitions
• Forward purchases or commitments

Recapitalisations are the most attractive to investors, as they provide access to established occupancy and rental income, without the feasibility and planning risk that constrain new supply.

What is the outlook for rents and income?

Income must do more of the work now that yield compression is fading. Investor rental expectations are measured, but we see scope for growth to exceed them. Rents are already rising faster in mainstream markets, occupancy is very tight, and supply is unlikely to ease quickly.

Turning rental growth into higher NOI depends on retention, leasing efficiency and cost control. That makes operator capability increasingly important, especially in PBSA and co-living.

Investor appetite for Australian Living is strong, broad and growing. Australia and New Zealand rank first among APAC destinations, Living leads other asset classes for diversified investors, and demand is spread across PBSA, co-living and BTR. Yet the cities investors favour most have the smallest standing markets, so the pace of investment will depend on feasibility, planning and access to opportunities. Constrained supply supports occupancy and rents, but operator capability will determine how much of that reaches investors.

See the full picture behind the numbers. Download the report (Link to flipping book) for the complete survey findings, charts and analysis.