Green shoots and caution signs: What investors are really thinking about housing

Optimism is rising, but deal structures, tax ambiguity and planning timelines are still the red flags.

After years of hesitation, investor interest in Australia’s living sectors is starting to re-emerge, cautiously and with conditions.

There’s no shortage of reasons to be optimistic. Demand is rising. Models like build-to-rent (BTR), purpose-built student accommodation (PBSA), and land lease communities are maturing. And across the board, investors are showing renewed appetite for residential assets that offer stable income and strong operational performance.

As Luke Mackintosh, Partner at BDO, puts it:

“More institutional capital will come to Australia. More activity in Sydney than Melbourne. Tailwinds for townhouses and house-and-land. Green shoots for single-family housing.”

But the capital isn’t flooding in. It’s watching, waiting and looking for signs that the system is ready to match the opportunity.

On 13–14 November at Hilton Sydney, the Living Sectors Summit will bring together capital, policy and development to explore what it will take to move from green shoots to meaningful scale.

What’s still holding capital back?

Despite the tailwinds, investors remain cautious. Many of the structural barriers identified in previous years remain unresolved or have worsened.

Here’s what investors continue to flag:

• Deal friction remains high.
  “Before a deal even begins, tax is half the conversation,” said James Greener, Head of Living Sectors at Charter Hall. Foreign investor surcharges, inconsistent GST treatment, and the absence of index inclusion for BTR and PBSA are adding risk and complexity.
  
  
• Planning timelines erode viability.
  “We’ve seen 25%+ construction cost increases in recent years, coupled with increasing authority contributions and longer planning timeframes,” says Greener. “You can have the best-located project in the world, but if the numbers don’t work, it won’t get built.”
  
  
• Domestic capital is still sidelined.
  Despite $3.94 trillion in assets under management, Australia’s superannuation sector is largely absent from the living sectors. As Anouk Darling, CEO of Scape, noted: “We manage $13 billion in assets from global institutional capital, yet none comes from Australian superfunds… it’s a missed opportunity.”

Where confidence is growing

Investor sentiment is shifting, not dramatically, but noticeably. More real-world examples of success, and early signs that policy reform may be gaining ground.

Recent delivery milestones in PBSA, BTR and land lease are helping to de-risk the asset classes. Policymakers are beginning to respond with targeted initiatives, including MIT reform and state-level planning updates. These initiatives indicate a growing understanding of what’s needed to scale.

In parallel, investors are adjusting their approach. Rather than waiting for perfect alignment, there’s a new focus on working within the friction: pricing risk more accurately, partnering with experienced operators, and favouring projects with clear feasibility baked in from the start.

The opportunity: Align capital and certainty

The capital is there. What’s missing is certainty. Investors across the living sectors are aligned on what would unlock greater participation:

1. Clearer tax settings
   Deal friction remains high due to inconsistent GST treatment, layered surcharges and unclear thresholds for foreign investment. The result? Longer negotiations, reduced viability, and capital redirected elsewhere.
   
   
2. Recognition as essential infrastructure
   Institutional rental housing, including BTR, PBSA and land lease communities, plays a critical role in housing supply. Acknowledging that role in policy could expand access to planning benefits and shift how investment mandates apply.
   
   
3. Index inclusion for BTR and PBSA
   Without it, many super funds remain structurally unable to allocate capital, despite appetite and asset performance.

Until these levers are addressed, investor interest will remain high, but so will the barriers to meaningful, repeatable delivery.

The takeaway

Australia doesn’t have a capital shortage. It has a clarity problem.

The fundamentals are strong. Demand is rising, the models are proven, and institutional appetite is real. But structural friction continues to distort feasibility and delay delivery.

Without coordinated reform across tax, planning and policy, the green shoots investors are spotting may never take root.

At the Living Sectors Summit 2025, these issues will be addressed head-on with voices from across capital, development and government in the same room, shaping what scalable housing delivery should actually look like.

Explore the agenda and secure your seat.