Build-to-rent a good prospect for investors

Around the world, property prices continue to rise and make it harder and harder for younger generations to afford to buy their own homes, especially when they also have to contend with high inflation. Many Millennial and Gen Z individuals also prefer renting due to the flexibility it offers them, while an increasing number of retiring Baby Boomers are seeking out low-maintenance rental options.

All of which is boosting the demand for long-term rental properties and creating new opportunities for investors, especially in the build-to-rent (BTR) developments that are becoming increasingly popular.

Read more: Should You Let Short-Term or Long-Term?

These are typically residential complexes that have been specifically designed and built, or converted from disused office blocks and shopping centres, to provide affordable long-term rental accommodation. Quite a number have sprung up in Johannesburg and Cape Town already, and they are typically managed not by a body corporate or HOA but by a single institutional investor or developer.

This ensures consistency and uniformity in property management, amenities and tenant experience and enables leases to be structured and community engagement strategies to be deployed to promote longer stays.

 Amenities in BTR developments often include gyms, pools, co-working spaces and social areas to appeal to long-term tenants, and many of these complexes also incorporate eco-friendly design, smart home technologies and wellness-oriented spaces.

However, while BTR developments are a good investment prospect likely to provide a steady stream of rental income even during economic downturns, they can be challenging for individual investors to develop. Consequently, the best way to maximise opportunities in this sector is to invest in the institutions or developers that already own large BTR portfolios.