This episode was recorded on the land of the Wurundjeri people of the Kulin Nation. We pay our respects to their elders past, present and future.
Richard: Hello, and welcome to another episode of Precisely Property. I’m your host, Richard Temlett. I’m excited to have you with us today. If you’re here for the first time, thank you for joining us. I encourage you to listen to our previous episodes where we discuss all things property, with a focus on dynamic discussions with industry leaders.
In this episode, we’ll be discussing the Australian renter with Nicole Hiddlestone of Infolio Property Advisors. So sit back, relax, and let’s get started.
Nicole has over 18 years’ experience in the real estate industry. She’s a licensed estate agent specialising in property management and project leasing, including Build to Rent. As Head of Strategic Growth at Infolio, Nicole leads Infolio’s project leasing and Build to Rent division, creating strategies that reduce vacancies, speed up leasing, and boost tenant retention. She partners with developers early to optimise floor plans, pricing, and customer experience to maximise returns.
A Build to Rent specialist, Nicole has pioneered leasing approaches that deliver faster and at higher rates. Nicole also helps clients navigate the legal and operational complexities of the sector to avoid costly missteps and deliver long-term success. Welcome, Nicole.
Nicole: Thank you for having me, Richard.
Richard: Nicole, in today’s episode we’re going to talk about the Australian renter in both the Build to Sell and Build to Rent projects or market as of 2025. I think it’s really important that we do this given the market distortions that have occurred across Australia because of the pandemic and also the changes in living preferences, particularly living in apartments and then also renting and renting longer term and how that’s playing out as of 2025. It’s also important given the emergence of Build to Rent in Australia and the key differences between the Australian renter and the American or the European renter. Because when I speak with different financiers, they certainly have made the point to me, and I know I agree with them that the Australian renter is quite different and values different items of amenity or different living styles compared to an American or European renter. And I’m keen to talk to you about that given your extensive experience in both sectors of the market.
Before we begin the episode, though, I did want to ask you an icebreaker question. You’ve seen so many different developments and leasing campaigns over the years. What’s one project that really stands out to you and why?
Nicole: One project that has really stood out to me is a project that was by Hampton. We worked on that in Abbotsford. It was a multistage development there on the river opposite the old IKEA site.
Richard: Yep, I know it well.
Nicole: You know it well?
Richard: Yep.
Nicole: So that was Eden, Haven and Sanctuary. We, with the developer there, leased that project out. And for the first stage, it was a phenomenal site. It had a fantastic builder. The builder there was amazing. The developer there, the quality of the product that they produce there was second to none. It was extremely popular with renters, and it was a development that actually went across and is one that I talk about even now to this day for current BTS or BTR that it had every possible product type that was so welcoming to renters at the time.
So, at the time in the market for the one-bedroom, two-bedrooms, it had some townhouse stock in there as well. It was quite…it had such a range. I had a fantastic leasing team and my team who worked on it with me and it was leased out phenomenally. We achieved very high rents, fantastic renters, but one of the things we also focused on was building the community of the residents in the building, which we can obviously talk about later, but it is something that’s really important for any new development. It’s the sense of community that the residents feel from the start because then you want the longevity of the renters as well. You don’t want to have that transient population going through the building. You want to have a community who engages in the building and that one there at Eden was phenomenal. It obviously led then into the next stage development for the developer as well. There was already a sense of huge desirability in the wider market for people to want to move into the next stage of the development as well when stock became available.
Richard: Great. Well, we will certainly get into how we build and curate a community. But before we get into that, could you elaborate a little bit more about your background and your experience in the industry? I’m sure the listeners would be interested to know what that is.
Nicole: Absolutely. So, I have been closer to 19 years in real estate. I have always worked in the property management and development space. I started in property management in Camberwell and was in there for over six years and have always worked in the inner suburbs of Melbourne, close to the CBD, and working with a developer. Then I worked directly with a developer with an in-house leasing team. We had our own real estate business there within the developer. I was exposed probably over 10 years ago from the start, from when they’re starting to do their feasibility studies through to their due diligence, how the whole process works from the other side. I was exposed to that which really piqued my interest and became even more exciting than traditional residential real estate, you would call it, traditional residential real estate for leasing and property management. And with the developer then starting to, once the building starts before it even comes out of the ground, it’s looking at their floor plans, it’s looking at architectural drawings, it’s looking to start doing pricing. So, then they’re looking at what stacks up for them in terms of the return that they will achieve and the difference they have seen from 18 months out, sometimes longer, from when it’s from concept, etc., etc., through to what the pricing is in the market, how markets change over that time.
If you’re looking over an 18 two-month period for what you’re pricing and rental appraisals, what you assume that will be for when they actually come to market, it’s very interesting to see through that whole process. And also, doing this day in, day out, it’s very interesting. It was very interesting for me even back then to see the difference in what I know is what a renter will pay for and I know what the market price is because I know when a renter walks in the door, what we know that they’re looking for is very different a lot of the time it was for what a development manager or what a builder will think that, oh, this is very appealing to a renter. It goes back to one of those simple ones where you walk in, oh look at the shower, it’s a fantastic rain head. And we would very often tongue in cheek say it was not thought of by someone who technically would have long hair because as a woman, we don’t always want to wash our hair every day. There’s not a handheld shower head, we can’t use that shower. That’s not appealing to us. We want to have both options because as a rain head shower, your hair gets wet every time you shower. That’s not appealing. We would just say there’s the random facts or those odd 1%-ers when you walk into an apartment, a townhouse, a property that makes a difference and will make someone make the choice whether or not that is an appealing property that they want to rent.
Working through that with the developers and then as we are doing now, fast forward through the last 10 years through that, I’ve worked on maybe close to 12 development sites through to whether or not that’s directly working for the developer or we’ve been engaged by a developer or a third party to assist with the leasing strategy, actually doing the leasing for them, doing the leasing in the ongoing management. And they’ve all been amazing, but the standout for me would definitely have to be Eden and Haven down there in Abbotsford.
Richard: Fantastic. Well, look, I’d like to break this episode up into two segments. The first one is Build to Sell apartments and what’s happening in that space, and then we’ll get into Build to Rent.
I’d like to start with the Build to Sell markets because there’s a lot of residual stock hanging around right now, and also living preferences in the Build to Sell apartment space have changed dramatically. I’m keen to learn a little bit more about what you’re seeing on the ground for the types of products that are in demand, some of the biggest mistakes that are being made.
I think there’s a number of listeners out there that are very keen to gain insights into what a renter wants. And then we’ll jump into Build to Rent, and I’d like to learn a bit more about what services you’re offering. And, as we’ve discussed when we were preparing for this, what you’re seeing play out on the ground.
So, jumping in to Build to Sell to begin with. What are you seeing now on the ground in the renter market space in terms of, let’s start with product type. What’s the most popular product type that you’re seeing?
Nicole: In terms of the Build to Sell, one of the most popular product types still remains at opposite ends of the spectrum. One-bedroom apartments for renters are still hands down, if you had an entire building of one-bedroom apartments, we could lease that every day of the week.
Richard: Very interesting.
Nicole: Yes, every day of the week. The market has definitely changed. One-bedroom’s traditionally, obviously, one of the smaller types and have the smallest amount of product in a Build to Sell, they are still extremely popular. A lot of renters, especially if it’s a couple, if there is two people, prior to COVID, they would take a two-bedroom apartment because they wanted the space, a working from home space, a spare guest room. We have found those one-bedrooms are more popular than ever, not just for singles, but for couples. They will prefer to take a one-bedroom and work from the dining space in the lounge room or like an eat-in-kitchen, rather than pay the money for a second bedroom.
They may have the desire to live in a two-bedroom, but in this current market, we are finding that renters will not spend the extra $80 to $100 to $150 a week on a two-bedroom apartment. Renters will take a one-bedroom apartment because affordability for them and one of the things we say, and it’s an analogy that we will use, but we see this with renters that extra $80 a week that they would have to pay on rent to get a second bedroom would be a massive change for their lifestyle and would be amazing for them, but as they say to us and what they do, that additional rent that they would be paying would mean for a renter that they don’t get approved for a car loan.
Richard: Gotcha.
Nicole: Because for their expenses, if they are going for a car loan, or they’re potentially looking to try and buy their own investment property as well and “rentvest”, as we call it, they’re living in these popular suburbs and they’re investing elsewhere, that additional rent that they would be paying for a two-bedroom apartment would mean that they don’t qualify for a home loan or they don’t qualify for a car loan.
So, renters are savvy. They’re not going to spend the money on rent when it then changes what they can do with their future or with their car loan that they’re wanting to get, etc. So, one-bedroom still remains extremely popular.
As I said, they are hugely popular and three bedrooms.
Richard: Okay. Talk about three bedrooms because I was going to ask you both for one and threes. Who are the renters by age group? You started to answer that with the one bedders, whether they’re singles or couples. Who’s renting the three bedrooms that you’re noticing?
Nicole: Your three bedrooms do tend to also be couples. Your three bedrooms are couples who either have one child, they tend to have one child, or they are an older couple or a very professional couple who, one will work from home and they want the space, not necessarily the bedroom space, but the three-bedroom layouts of apartments.
This is a phenomenon that we’ve seen across most sites and we obviously see as many sites as we can see and properties, but the three-bedroom apartment layout and the feel of what they have for a renter and that demographic when it comes to a three-bedroom. If it’s an older couple downsizing, when they downsize, they don’t want to downsize to something that feels like an apartment.
If they’re downsizing into an apartment, they don’t want it to feel like an apartment and a three-bedroom tends to have the layout that’s like a house. So, they tend to be what we see in the three-bedrooms, sometimes sharers. We do see a lot of the professional people who are professional sharers, you would deem them, not your traditional student accommodation as such, but professional sharers. They tend to be in their early 30s. They tend to only have two people, though. We don’t ever very rarely, we don’t see in our market three people sharing a three-bedroom. They tend to be two people sharing a three-bedroom property because they want, obviously, the two bathrooms for their privacy and then there will be one of them that works from home. That’s what we tend to see in the demographic across them.
So, one and three bedrooms, hugely popular every day of the week. Two-bedroom apartments, this is what we have seen especially over the last two years. Two-bedroom apartments, it does definitely come down to price point. A two-bedroom, one-bathroom apartment obviously is at a lower price than a two-bedroom, two-bathroom apartment. A two-bedroom, one-bathroom apartment will always out rent a two-bedroom, two-bathroom apartment purely on affordability.
Richard: Okay. Wow. Compared to 10 years ago, if you can cast your mind back that far, with the age group of renters, has that changed? Has it increased? Is it similar?
Nicole: I would say renters tend to be older. We don’t tend to see a lot of people out of home for the first time. 10 years ago, you had a large part of the rental population was in that 18-22, 23-year-old population we saw. A lot of them were first-time renters out of home. We don’t tend to see a lot of that these days. A lot of that, we believe, and this is what we’re seeing in the market, it’s an affordability issue.
Richard: So, they’re staying at home longer?
Nicole: They’re definitely staying home. Renters are staying at home longer because it is an affordability [issue]. They’re not going out into that rental market, so they are the youngest demographic we would tend to see would be 23, potentially. We don’t see anyone much younger than that.
Richard: Wow. Okay. Talk to me about car parking and storage. Blanket question, but do renters want car parks? Are they prepared to pay for it? Do they want storage? Is there enough storage? What are you seeing there?
Nicole: Interesting question. They fall into one of two camps. The car park, majority of them, you would say are rough figures. And again, these are just based on what our colloquial, what we see day in, day out. Majority of them do want a car park, but they will not pay additional money for a car park. They do understand from what we see. Renters do believe that car parking isn’t not a right, that’s the wrong word for it, but they do believe that carparking is a necessity that comes with the property.
Richard: Okay.
Nicole: Most of them, well, they expect at least one carpark. You will have renters, and we certainly have them as well, and it is options that you can have. They will pay for an additional second car park, but the expectation absolutely is that one car space comes with their property that they are renting and is included in what they’re renting for. And we actually do get these comments.
I will say I was doing a leasing tour with my leasing team last week because I love doing it and I love hearing what they’re saying and I love getting that feedback day in, day out. And when I was with them and it was someone who had come from a very well-educated renter, they know their rights, they know what’s available in the market, they’re very well aware of what is available. And the comment that we had received was one of her first questions was about wanting to know how many car spaces came with it because she’s aware that other sites and where she was looking at, that it was an additional cost for a car park and that was an automatic no for her. She was not prepared to pay for what she believed and what she deemed was something that should come with a property.
Richard: Interesting.
Nicole: So, that was very much what she had. In terms of storage, storage cages, from what we are seeing, especially in the last probably three years, storage cages are nice to have. It’s definitely not a requirement and it would not be something that would be an automatic no for a renter in taking an apartment or a property. Storage internally in an apartment, obviously, still a massive, huge bonus to be able to have storage inside an apartment.
Richard: Do renters pay for it or are they prepared to pay for it?
Nicole: No, they will not.
Richard: No?
Nicole: Nope.
Richard: Interesting. Talk to me quickly before we jump on to BTR because I want to then blend some of these insights into BTR. There’s been a lot of legislation that’s come through recently that’s impacted tenants’ rights. Obviously, the government is attempting to balance up the rights between landlords and tenants. And, certainly, I speak with a lot of investors who basically said that between the interest rate rises and the increasing legislation that it’s just not viable for them to continue to hold on to their property and they’re selling them off. Is that what you’re seeing on the ground?
Nicole: Yes. We saw that particularly. The legislation changed in March 2021, and it was a huge shake up to the rental industry in Victoria. The government did it under the guise and it was deemed so it was for fairer, safer housing for all, which absolutely, definitely required. Housing is a fundamental right, and it is something that we absolutely want to provide.
And it is worth noting that, from our experience, 99%, that’s probably generalised, but the majority of people do the right thing. Providing the fairer, safer housing, amazing, absolutely. The changes to the legislation, what it did require, though, it put a large expectation requirement on owners who were already doing the right thing, but it monetised it. It required them to have paid for the minimal standards. Basically, it came under minimal standards, and the compliance safety checks all required. We did experience across the industry and across real estate a large number of owners who weren’t receiving their return on their investment, who sold out of their investment properties, which had the opposite effect on the rental market.
It led to a shortage because a lot of these owners of the investment properties sold their investment properties and a large number of them were purchased by the first-home owners or owner occupiers. So, they were actually taken out of the rental market.
Richard: I should have said that, I didn’t fully articulate that it was also hugely because of the additional taxes and charges. I wonder, in your experience, do you think that the taxes and charges had a greater impact than legislation, or do you think it was a combination of both of them with rates increases? Or what was your experience?
Nicole: I think it was a combination of all of that and the land tax. The land tax had an absolutely huge impact on a large number of owners, and it became to the point of, for them, if you’re talking owners who potentially have held a property for over 12, 15 years, they’re looking at cashing it out and putting their money elsewhere.
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Richard: Let’s shift gears into Build to Rent. Could you please explain to the audience a little bit more about what services you offer, what you’re doing in various projects?
Nicole: Absolutely. So, with Build to Rent, it’s a fantastic product and it is still relatively new in the Australian market and it’s definitely relatively new in terms of renters understanding what a BTR and what a Build to Rent property has that benefits them.
So, with Build to Rent, we work with developers and owners, obviously, and we do it from end to end. We offer a full service. We will do the project leasing and the ongoing property management for them. We do this because we love it because when you lease a building and for BTR and also for BTS, it’s a specialised skill. You need to marry up and have the right people who know the project and who know that site like they would be living there. So, you know it from start to finish. You know every inch of that building, you know where everything is, someone, a specific renter who may, and there are a lot of different demographics and different communities in the market who will require specific things in a building as well.
We have a lot of them who require or who will want a certain outlook or will only want a certain direction that a building can face, etc. We deal with a lot of people, and you have to know that site and you have to also understand it from what we say from the client. So from a renter journey, from start to finish, when they arrive on a project, to have a look through that. You have to remember they’re looking at this, that this is a renter’s home. This is not just a project. This isn’t a BTR that you look at, oh, it’s a BTR, we have to lease them out. This is the price, and we need to lease the building out for minimal vacancy at the highest return. Absolutely, fundamentally, that is what we are here to do and that is what we work with our clients and the developers to do. But we also need to look at, in order to do that, you need to provide that positive customer journey for the renter coming through the building who then wants to rent it because they have a lot of options and there are a lot of options for a renter in the market. There absolutely is. They can pick and choose where they want to live and to have them want to choose one project over another, there’s a lot that goes into that. And a lot of that comes down to the leasing team you have on the ground who makes that renter feel you’re not doing an open for half an hour and bringing however many people through and you open the door and let them walk through. That doesn’t work in this market.
Richard: Gotcha.
Nicole: And that also doesn’t create a sense of community, and it doesn’t create a sense of desirability for a renter to want to live there. They have to be able to picture themselves living there. They really do.
Richard: Got a couple of questions before we dive a little bit deeper. The first one is… I’m not yet convinced that the renter in Australia really understands, or values Build to Rent. What are you seeing on the ground when some of them, it must be their first time coming through. What are they telling you? What’s their response? Are they impressed? Are they unimpressed? What do they think of the rents, the amenities? Do you think that they are starting to understand it? You know, am I wrong? Are they actually starting to understand it?
Nicole: No. I don’t believe they do. They don’t yet understand it. A lot of them don’t understand they’re coming through a project that is a BTR. They’ve seen the project, whether that’s on social media, advertised for rent on the internet. They don’t understand that it’s necessarily BTR, and they don’t understand how the benefits to them are.
In terms of the longevity of a lease, up to five years plus, they can have. They don’t understand that for them, in their mindset, and this is what we see, they need to find a property to live in, they’ve seen something, it’s in the area that they’re looking for, it has the bedrooms and the bathrooms that they’re looking for. In terms of amenities, that comes second. It fundamentally does for what we see on the ground, them choosing, and it’s the price point.
If you have a price, it can have every amenity in the world for it. If it is out of what a renter is prepared and is able to pay for a rental property, you can have every amenity. They’re not coming through the doors. If they’re not coming through the doors, they’re not renting the property.
Richard: Interesting.
Nicole: Yeah, in terms of them understanding, a lot of the time, we spend a lot of time explaining to a renter the benefits of a BTR. They don’t understand it. And that’s speaking very plainly. They don’t understand the benefit to them, and a lot of them have a lack of caring, a lack of understanding because for them, if they have a lease, they’re setting a lease, they don’t understand why it benefits them that it’s a BTR because for them, we’ve got our lease, we only want to be here for two years and then we’re going travelling or we’re planning to move interstate, starting a family and we are purchasing it in outer suburbs, etc. In terms of Build to Sell or Build to Rent for them specifically, it makes no difference to them.
Richard: That’s really interesting to hear. I had a question. You’ve kind of answered it or killed it, but I’m going to ask it anyway. There’s ongoing debate about the amenities in the building and if it sells, basically, the sizzle to get the tenants in versus the ongoing upkeep, and whether, there’s a cost benefit analysis to it and whether it’s actually worthwhile putting in, for example, a fancy swimming pool or whatever it is to entice renters into the building versus once they’re in the building, whether they actually use it. What are you seeing? I know you started to answer that in terms of it being secondary. But I suppose thinking through that logic, they’ve obviously looked up the property. It’s in the right location. It seems to have the configurations. They can obviously afford the rent. Well, I’m assuming they can afford the rent. So, my question to you, first of all, looking at your reaction is, are they made aware of what the rent is, or do they rock up and then get a bit of a shock?
Nicole: No. Rental prices have to be advertised and it’s worth noting that that’s an additional change to legislation that’s coming in around November this year as well. That it will be now a requirement too that rental prices cannot be arranged. They will have to be a fixed rental price per property. So obviously, if you have a BTR, you will have a very large range of price points, but they will have to be advertised at individual prices for the ones that are advertised to the market. But what we are seeing, there are two very different types of BTR. You have the luxury BTR, which is at a very high price point with all of the amenities. Absolutely.
And then, you would have what we would deem the affordable middle price point for a BTR. If you have a renter who looks online, they also will have a price cap. And this is, again, just what we’ve seen in what our market research has been and all our marketing research shows. Renters tend to put a cap when they’re looking online or if they’re looking on their social media. So, they will see something and automatically, if that price point for a luxury BTR is $300 a week higher than a middle affordable BTR, they will not look at it.
You can have every amenity in the world. You can have the swimming pool, you can have the gym, all of their work from home spaces, everything, and they are fabulous. These developments are absolutely amazing. I’ve been through them. They are absolutely phenomenal. A renter who cannot and it’s not necessarily they cannot afford it, it is out of their price range and their budget. And this is something that I have these discussions with developers and they say, these are the demographic and we know their rough incomes and their affordability. And what we are seeing on the ground, when we do speak with them, it’s not that they can’t afford it. Affordability sometimes is, I think, the wrong word. It’s what’s in their budget.
Richard: Yeah. You’ve mentioned that and you went back to your car loan example.
Nicole: Absolutely, and what we do see, if they are in their late 20s, early 30s, and this is a sub section obviously of the market or the demographic of renters that we see, they absolutely have that disposable income, they have jobs that have higher salary and they have the affordability where they would say, well, they absolutely are the target renter for demographic, for the luxury BTR that have the amenities. We see so many of these in a middle priced BTR with minimal amenities.
Richard: Okay.
Nicole: Because what we get from them, and we obviously have discussions with them, and again, I mentioned when I was doing these last week, I ask all the questions because, one, I’m genuinely interested and I love what I do and this is why I do it. It’s about people. But speaking with them, they’re not staying in their jobs a lot of the time for five years plus. They’re in a job and they have job flexibility where they’re not necessarily going to spend that additional $300 a week. They have the affordability, but they put their money elsewhere. They’re looking at travelling. They’re looking at lifestyle. They know that their job necessarily the job security on both ends, on them being secure and continuing to hold that current role, or is in them wanting to change jobs, change industries, change their occupation. We see a huge range of people who are looking at doing that. They won’t spend the money on rent because they want flexibility of lifestyle, not necessarily for spending on things like, oh, my gym membership, my health and wellness membership, because the argument then becomes from a developer, but they spend the extra money on the rent here in a luxury BTR with those amenities included. That’s an option for these renters. They want to have the choice for where they spend their money. They don’t want you making that choice for them in adding that onto the rent. That’s some of the feedback we get from these renters directly.
Richard: Great. That’s fascinating to hear. Talk to me about the internal fixtures and fittings of apartments, like fair wear and tear of carpets versus floorboards, furnished versus unfurnished. What are your views on some of this based on, again, the Australian renter?
Nicole: Yep. Australian renter. It has had a big shift. Just as a little aside, we had a shift post COVID in Victoria where furnished rental properties were very undesirable. We went through quite a stage where it was very undesirable from the post COVID pandemic, people’s comfort levels around furnished properties. That’s actually changed post that. We found probably over the last 18 months especially; there is a market for furnished properties.
But as I always say, it’s a very niche market and it does tend to be more of a transient renter. You don’t tend to have them stay longer than 6-12 months. If someone’s moving here into a furnished property, interstate, overseas, out of home, whatever it may be, it’s a transient, it’s a short-term solution for them. If they are staying longer than that, they want to furnish and start making something their own and having their own possessions, basically. So, we do have furnished BTR. I would always say it’s a very small niche market of percentage of properties.
BTR can go one of two ways as well in terms of that, as in including white goods or not including white goods. It’s interesting to say we have a large number where we have the options for both and a lot of the time, it tends to be it’s definitely skewed towards not having the white goods included. If it is a renter who’s already been in the rental market or has been a homeowner and is transitioning etc., etc., the majority of them have their own white goods. And for them to then have to sell, donate, dispose of, etc., to move into an apartment that has white goods, it can often be a deal breaker for them in terms of because they’re actually thinking of their next move, they’re not thinking this is going to be my forever home. When I move out of this apartment, this property, I will then have to purchase white goods. So, I don’t want to move into something where I can’t bring my own white goods.
Having said that, there obviously are some who it’s a bonus for them. They’re the little things that we tend to say, you need flexibility on providing both or not providing both. Carpet, again, that’s a real fifty-fifty. We tend to have a mixture of both. I still think the majority of what we see, floorboards in living areas and carpets in bedrooms are by far the most popular for renters. You have also balconies or outdoor spaces, obviously, with a large portion of renters who have pets, a balcony for an outdoor pet, there’s something that is required.
Richard: Okay. Talk to me about creating a community. What are some of your strategies in terms of doing that? Why is it important? And what are you seeing in that space?
Nicole: We see residents who feel a sense of belonging where they live and a sense of pride in where they live, of being able to say hello and wanting to say hello to their neighbours in lifts, in common areas, coming in and out of lobbies. We see this constantly. If they don’t feel a sense of belonging and they feel they’re isolated or they feel like they don’t have the genuine connection to people, there’s like no roots have been put down in that property like you would have. And it doesn’t necessarily have to be the coffee mornings or the rooftop yoga, or necessarily, it doesn’t have to be arranged group activities for the residents, it’s just a genuine connection of them in the building.
A lot of the time, what we have found, one of the big things which has been a great change in the legislation when it happened with pets, you do tend to find the pets, the dogs, they’re always a huge icebreaker for people. For the majority of them, they do tend to, a lot of the time, if you have got anything with a common space for the pets it is always a huge bonus because that tends to bring the people together. And we do find if you have a lot of, and this is obviously a small section, but single professional renters who are on their own, they do tend to want to have that community but also be able to shut their doors.
So, they want to be able to speak to people and say hello and have a chat, but then they want to go into their own home. But having them feel that it’s a safe, that’s a huge thing as well. Having it as a safe, happy, well mix of vetted…I guess I’m trying to think of more of a correct word for it, the residents in the building are all there because they need somewhere to live and it becomes their home and they want to feel that they’re safe there and that they can have that community with the people there.
Richard: Okay. Talk to me about the mix between males and females. Are there more males? Are there more females? Is there any distinction? I’m always fascinated at that.
Nicole: No, we tend to say it’s fifty-fifty. We would say apartments, we do have a lot of single women and that is for the security of the building. That’s a huge thing for them. That also comes down to, and a part of what we do as well, and it always resonates well, is we actually show them what car park is attached to what apartment because that makes a huge difference. If they’re working, how far is it from the lift? Where is the car park? Because they’re secure basement car park, and if we’re talking of a BTS or a BTR, but we go to the point of showing them which car park it is because for a renter, if they take looking between two apartments and if it’s one that is closer to a lift and they don’t have to come around a corner or regardless of security cameras, etc., that makes a difference to what we see on the ground with a lot of the renters. So, we make sure that we, our leasing team, this is just part of what we do because it makes a difference. They want females, and again, that’s generalised, but what we are seeing, they want to feel the safety and the security.
We do also tend to have, depending on the location of a development or of a site, obviously, we have a lot of males as well, and we do also have a lot of which can be hard because we’re human and we do what we do and we love and we obviously hear all of the stories. We do have a lot of, and we really make an effort to try and find the right property that will work for them as well when we have a lot of family separations. Furnished apartments obviously are very well suited for that if we’ve had a relationship breakdown and they want to stay still close in an area for family and for children and schooling, etc. I think that’s a huge under-tapped section of BTR, of placing them closer to, especially in the middle suburbs, schooling. I think that’s a huge thing that will become in the future of the renter.
I know that you had touched on that before and if I can jump ahead to that, what we see will happen and renters understanding BTR in Australia. Apartment living still is it’s all in Europe, the UK, everything. They’re used to apartment living. They understand apartment living. Families will live in apartments. In Australia and in Victoria, it is still a newer model for them to want to choose to live in an apartment. They still see that a house and a home with a backyard, they have not yet understood that the apartments, a lot of them are the same square meters of a house. They have the feeling of a house inside and it’s the location of them. That’s what I think it is. I think when BTR starts spreading out of the inner city, the ring around Melbourne, I think there’s also a huge potential there for developers doing BTR in the middle ring suburbs where people can’t and probably the cost of them as well, there will be a huge, huge uptake in renters who, if they’re built there, it’s built and that will come. I think in a lot of those suburbs, that will happen.
Richard: Great! Nicole, look, we’ve got through a lot today. I wanted to thank you so much for coming on. You’re an absolute wealth of knowledge, and, certainly, I’ll be putting a number of both Build to Sell operators and then Build to Rent operators your way because I’m having a lot of these discussions about understanding the target markets, what they’re prepared to pay, which I thought was fascinating, what type of amenities should go in or should not go into the building, and then also that curation of the community and getting sticky tenants because that then reduces turnover, reduces the void in the building. And I think that that is where significant value can be added. So, let’s say goodbye for today, and thank you so much for coming on the show.
Nicole: Thank you so much for having me, Richard.
Richard: Hi, everyone. I hope you really enjoyed the session with Nicole. And, certainly, I hope that you gained the amazing level of energy and enthusiasm she has for her job. It’s absolutely infectious, and I love connecting with her and sharing ideas and insights. I certainly think that she’d add a lot of energy and enthusiasm to your projects should you wish to have her on board, which certainly I would encourage you to do.
In terms of the takeouts for today, there were a number of ones that I thought were very relevant. The three that I wanted everyone to focus on for both for the Build to Sell and more relevantly the Build to Rent markets are as follows.
Australian renters are definitely very different to the US or the UK renter. There will be similarities, I appreciate, but we must keep in mind that the climates, the living preferences, the cultural preferences in Australia are different to the US or the UK. And a perfect example to illustrate my point is the enormous service industry in the US where people will operate on tips. And so, the level of service in a BTR building, for example, will be much greater than potentially here based on the financial remuneration of the staff here versus overseas. I’m convinced that we need to understand the Aussie renter a little bit more in terms of what they will and will not pay for.
The next finding, and this is relevant for both Build to Sell and then Build to Rent, and the residual stock hanging around in the Build to Sell apartments right now, particularly in Metropolitan Melbourne, and there is quite a lot of quantum still hanging around, although it’s being digested. I thought Nicole’s comments about the weekly rent and those price points and factoring in what that rent has an impact on in terms of the overall budget of the household. And the example she gave about taking out a car loan, I thought, was very well made. Sometimes there’s a risk that we just focus on the income, the 30% of that income to service the rent, and we forget that there’s a number of other living expenses that are necessities for these renters. I think that that’s something we certainly need to factor in when we’re doing the depth of demand analysis for the renters across the different segments of the market.
Finally, there’s an ongoing debate that I enjoy having, and I’m not really sure there’ll ever be a right or wrong answer. It’s probably submarket specific, but it relates to the amenities in the building and really the cost benefits discussion. The perfect example again is having a swimming pool. It’s expensive to put in. It’s expensive to run. Does it get used? Does it attract people into the building? There’s various schools of thought on that type of amenity or item of amenity. But when I’m doing a lot of work with both the financiers and the developers, they are going, “wow, this is a significant cost. What’s the return on investment?” And I suspect in certain submarkets, for example, in Brisbane, it might be very much in demand. But in Melbourne, I still query whether there’s the return on investment that is required. I suspect that a lot of the BTR operators that are tracking the data in their projects, which I think is incredibly clever, and you need to be doing that for your data driven decisions, we’ll be able to ultimately land on whether this is being used and how much that item of amenity is being used. I look forward to pulling that apart with some of them in a few episodes’ time.
Anyway, those are some thoughts for you today. Hope that you enjoyed the episode. Thanks very much.
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