How can property developers take advantage of the growing demand for both build-to-rent assets and fully-furnished apartments? Andrew Kidd, Managing Director and Co-Founder of AJK Outfitters, provides an outline of the current state of play – and how AJK is uniquely positioned to assist.
Furnish and flourish: the rise of fully-furnished rentals in build-to-rent
The current shortage of student accommodation in Australia is news to no-one.
Last year, we were advised to expect up to 161,000 new international students into Australian universities. And a new ruling by the government in China has resulted in about 40,000 international students rushing to Australia in time for first-semester classes.
As The Guardian points out so succinctly: “Once they arrive, they will face an incredibly tight housing market.”
A good part of the reason for the student accommodation shortage is that universities themselves sold property simply to cope with the seismic changes that Covid wreaked on the sector. According to international student resources website Insider Guide, in 2021:
- University of Sydney sold over $700 million in property
- University of Wollongong listed three of its properties for sale
Of course the student accommodation shortage is only one part of a broader rental crisis in Australia. Unfortunately, rising inflation and increased costs of living are exacerbating the situation for tenants from all walks of life, and students are finding themselves the target of scammers.
An opportunity for build-to-rent developers
There’s no doubt that the student accommodation shortage is an opportunity for Australia’s burgeoning build-to-rent (BTR) sector of the property development industry. In 2021, Colliers was already conceding that BTR would be a prominent player in its suite of mainstream commercial property asset classes in Australia.
In 2022, the AFR reported that BTR operator UKO expected to more than double its portfolio to over 2,500 rental units over the next two years – after leasing the entirety of its newest building in inner Sydney in just four weeks.
And in 2023? It seems the term ‘boom’ would not be inappropriate.
“Australia’s built-to-rent market is rapidly becoming the most discussed and intriguing super asset within the industry as rental vacancy rates continue at record lows nationally.”
Furnished apartments: a growing market
The demand for fully furnished rental apartments in Australia increased by 20% in 2021, compared to the previous year (source: Realestate.com.au). We expect the growth rate to be even stronger in 2023.
Andrew Kidd, Managing Director and Co-Founder of AJK Outfitters, says property owners and developers have been quick to respond to the demand for fully-furnished apartments, especially in the build-to-rent sector. Further, developers who have already embraced the BTR model are in a terrific position to meet the demand created by the burgeoning student influx.
“There’s no denying the growing demand for fully-furnished apartments: AJK’s engagements and orders support the fact that occupants are choosing to lease up fully furnished BTR stock.”
Andrew Kidd, Managing Director and Co-Founder, AJK Outfitters
Andrew also said that, although industry-wide supply chain issues are not quite over, AJK’s model means it is uniquely placed to meet demand.
“Our ownership and accountability of the supply chain is key – for both custom-made furniture and fittings and our extensive product range. We source directly, and our major suppliers are already under contractual terms.”
Delivering FF&E for BTR developments
AJK is uniquely positioned to assist property developers to deliver on the demand for fully-furnished BTR projects.
Our recent engagement for Realm Caulfield, Melbourne, included the design, procurement and installation of furnishings for more than 140 build-to-rent apartments. Upon the completion of phase 1, with the developer quick to recognise the demand for the furnished apartments, AJK was immediately engaged to continue.
- Phase 1: 60 apartments completed.
- Phase 2: A further 40 apartments completed on lease up of furnished stock.
- Phase 3: engaged to fit out a further 40 apartments.
Andrew said AJK worked closely with the client asset manager to design, procure and manufacture four apartment product types. “Our team of joinery specialists delivered a complete turnaround in 5 days – on time and on budget,” he said.
“I could not speak more highly of the AJK team. Throughout the entire process they worked with professionalism, communicating frequently to ensure everything ran as smoothly as possible. From the initial design, planning, delivery, and installation, the team operated flawlessly, anticipating issues and implementing solutions on the fly. Thank you to the entire team!”
Alessandro Biondi, Asset Manager Residential, 151 Property
Read more about Realm Caulfield in our detailed case study.
Living to work and play
Generational influences also play into the demand for places in fully-furnished BTR developments. Marketing experts tell us that millennials are more inclined to rent than own, to value experiences and convenience, and to seek out community.
Hence, the beautifully designed, communal creative spaces that are a feature of BTR developments mean they are highly sought after by students as well as young professionals.
QuadReal Property Group’s development in Brisbane is a great example.
“It will feature a mix of studio, one, two and three-bedroom apartments as well as premium amenities and communal spaces, including a 25m lap pool with beach edge, podcast-music recording studios, barbeque pavilion, fully equipped gym, co-working facilities, outdoor spa retreat, dog wash facilities, yoga room and resident lounges.”
Fully furnished: AJK can help
See for yourself why AJK is well placed to help developers deal with the rapidly growing demand for fully-furnished rooms in the face of the burgeoning student influx in Australia’s university cities. Visit our projects page.
Are you a developer considering a fully furnished offering for your residents? AJK Outfitters is Australia’s leading turnkey outfitting business, with over 15 years of experience delivering tailored fitout solutions across a vast range of sectors.
Contact us to learn more: https://www.ajkoutfitters.com.au/contact/