“The young and the old are changing how we live and new types of accommodation are becoming increasingly desirable,” Ms Wild said.
Living sectors are different from traditional housing because of the way they operate, according to a JLL report on the assets. This is usually on a master-lease basis, under a profit-sharing model or in an operating company/property company, called an opco/propco structure.
Ms Wild said in Australia, senior living, student housing and aged care were in a growth stage of maturity. Build-to-rent is developing, while the co-living sector is in an introduction phase.
Mirvac is the first major developer to enter the build-to-rent sector with a new site at Sydney’s Olympic Park.
Mirvac chief executive Susan Lloyd-Hurwitz said the group was committed to the sector, “but it will be a slow process”.
“Renting has become a lifestyle choice for a much wider group of people who want to be closer to work and other lifestyle services and amenity. We believe build-to-rent can provide renters with better choice, better quality and better security of tenure,” Ms Lloyd-Hurwitz said.
“Recent reforms from the federal government, as well as the work of state government working groups, have demonstrated strong support and momentum for the build-to-rent sector.”
Ms Lloyd-Hurwitz said build-to-rent made good business sense for Mirvac, providing the group with a new asset class and a secure revenue stream.
Rohit Hemnani, chief operating officer and head of alternatives, capital markets, at JLL Asia-Pacific, said there was rising investor interest in the living sectors across major Asia-Pacific cities because demand for affordable, alternative housing options was intensifying.
“Investors in search of stronger yields, portfolio diversity and long-term holds should hedge their bets on these sectors now,” Mr Hemnani said.
While return expectations for the living sectors vary greatly by city and category, overall they are expected to outperform traditional residential properties, according to JLL, with plenty of opportunity for market penetration now.
Within five years, there are expected to be substantial portfolios across Asia-Pacific, and in 10 years, significant levels of trading.
One of the fastest-growing sectors is student housing, where developers are competing with office investors for new space.
Melbourne and Sydney are ranked among the top 10 cities for internationally mobile students, according to new research released by CBRE.
Rosie Young, director of CBRE hotels/student accommodation, said with commercial property yields at all-time lows in traditional real estate sectors, investors are increasingly looking elsewhere.
“This, coupled with growing student demand, has led to rising interest in the purpose-built student housing sector,” Ms Young said.
“This was reinforced by CBRE’s recent Global Investor Intentions survey, where 9 per cent of investors identified student accommodation as the most attractive alternative real estate sector, up from 4 per cent the previous year. This represented the biggest increase after data centres.”
According to JLL, aged care and senior living spaces are more culturally accepted in Australia than elsewhere in Asia.
“Australia is one of the few countries with an established lifestyle senior living sector. Due to greater life expectancy and an increasing number of single-person elderly households, the need for these units is likely to continue to push development demand. Sydney is a growth market with yield estimates between 6 and 8 per cent,” Ms Wild said.
Carolyn Cummins is Commercial Property Editor for The Sydney Morning Herald.