White Label BtR Operators Ramp Up in Aussie Market

Australia’s build-to-rent market is growing up. As at the end of 2024 there were 10,276 operational build-to-rent units in Australia. According to Franklin St research, a further 5928 are due to come online in 2025, with a national vacancy rate of about 1.4 per cent. But with that comes growing pains. While big institutional grade build-to-rent developer-operators, such as Greystar, have moved into the market, it is the emerging end of the market where the real learning is taking place. “You need to have somewhere around 4000 rooms to really make it worth your while to be an operator,” Veriu chief executive Zed Sanjana says. Some new players, including Novus, are tooling up to create their own operations arms to the business, it remains fairly uncharted territory for smaller developers. In Australia Veriu is known as a short-stay operator in the hotel sector. But Sanjana says the business is stepping up into build-to-rent white label operations. ▲ Veriu offers developers a white label third-party operator service for build-to-rent projects. “There’s probably two paths globally,” Sanjana says. “You’ve got third-party operators like ourselves that operate buildings on behalf of institutional landlords and owners. “And then you’ve got fully vertically integrated build-to-rent operators like Greystar, who’s growing in Melbourne.” These organisations will hold the assets—Greystar is actively building and scaling up its operations arm as it completes its first projects in Melbourne. Meanwhile, third-party operators offer services as white label operators to developers focusing on build-to-rent who may not have the capital or capacity to build and run operation arms. Sanjana sees it as a major opportunity. “We’re probably the largest operator of built-to-rent in Australia,” Sanjana says. “We’ve got close to 28 buildings ... we operate but not develop or own,” “We’re not developers—we stay out of that.” Rather, Veriu runs and manages properties and has worked with developers and builders to create them. Sanjana points out that for many looking to enter the build-to-rent space, creating their own operations arms is just not feasible. “For operating companies in the build-to-rent space to become viable, they need to have critical mass,” Sanjana says. Sanjana says that critical mass is about 4000 boxes, otherwise the property return merely subsidises operations and, he says, that is a big ask in an emerging market. “I think over time, it’ll be challenging for some of those developers, particularly in the current environment, to meet that hurdle of getting to 4000 rooms. “It’ll be interesting to see how the market develops over the next five years and whether some of those models go to a sort of third-party operator basis, as opposed to being fully integrated.” Franklin St is forecasting further consolidation in the market with larger entities acquiring scale in the market. Local’s recent acquisition of The Smith Collective at the Gold Coast is a good example. The off-market deal for 1252 apartments across 19 buildings makes Local now the largest build-to-rent provider in the country. But there are developers not waiting for that magic 4000 number. ▲ A view of Greystar’s The Gladstone project with three towers of built-to-rent homes in Melbourne’s Fishermans Bend precinct. Coronation Properties launched its own build-to-rent arm in April of 2024 called Nation after spending two years in preparation and eight years researching the idea. “Our managing directors have had their eye on the build-to-rent market for some time,” Nation operating and leasing head Stephanie Mitevski says. “They’ve done a lot of research overseas. “And we really wanted to take our time with the setup.” It was timed to coincide with the opening of two build-to-rent projects in NSW: Charlie Parker and Mason and Main. The projects account for 550 build-to-rent homes and the company is keen to hit 10,000 within the next 10 years with more projects in the pipeline for St Peters, St Leonards and Waterloo. “It’s one thing to say that we’re doing well operationally with our 550 apartments but it’ll be another thing to say it when we get to 10,000 so for me, it’s very important that we get it right,” Mitevski says. Instead of hospitality and hotel experience, Nation drew upon facilities management experience within the existing team at Coronation Properties. The move to create an in-house operator fits with Coronation’s strategy—its builder is also in-house. Similar moves have been made by developers such as Mirvac who have the Liv platform. Other developers keen on build-to-rent have moved to partner with companies such as AustralianSuper for the capital needed to develop and operate the assets. ▲ Build-to-rent has taken off in Melbourne with UKO Royal Park north of the CBD in Parkville. Build-to-rent has also opened up another opportunity for developers with the option to trade the asset after completing the project. That too then provides two options for buyers—those with capital and capacity to operate the asset themselves and those who wish to hold an asset and outsource the operations. “Some might have some operational partnership, and some might not, and some might just be quiet capital that doesn’t take any participation in operation,” Sanjana says. “So with that type of capital entering into the market purchasing assets, that’s where the opportunity sits for us.” Sanjana says Veriu’s clients often come from builder and developer families who wish to hold on to an asset but need someone with the experience to manage it. One of their largest clients is the Lowy family with a project in Melbourne’s Parkville being managed by Veriu with 70-75 per cent of the residents working in the healthcare industry. Trading does create instability for tenants as it raises questions about the consistency of the operation and management of the assets as they are transferred from one holder to another as Sanjana points out. “People are paying 10-15 per cent more as a premium for safety, security, amenity and community,” Sanjana says. “There is a lack of stability for tenants.” He says 65 per cent of Veriu’s tenants are women aged 28 to 33 years, exactly the kind of demographic that wants safety and security the most. Mitevski agrees. “We have had tenants where they’re almost scared to talk to you, because it’s going to affect their lease,” Mitevski says. “We sort of have this list of pain points for renters that we really wanted to target. “And one thing that I feel like renters, they’re always just thrown the keys and are basically told, ‘Oh, you can figure it out on your own, as long as you pay your rent, you won’t hear from us.’ “That’s not what we’re trying to build—we want long-term tenancies, and we know that to build that trust between the tenant and the landlord, we need the tenant to feel safe in their home.”

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