Legislative Assembly for the ACT: 2022 Week 11 Hansard (Thursday, 24 November 2022) . . Page.. 3802 ..
MR PARTON: My question is to the Minister for Housing and Suburban Development. The question relates to the first build-to-rent site in Turner. Minister, how long will the successful bidder have to start construction on the site, and will that be contractually enforced?
MR BARR: This site is part of the build-to-rent prospectus that I have released. I would anticipate that the usual commence and complete requirements would be in place for this development. I will double-check that, and if that is not the case, I will come back and advise the Assembly.
MR PARTON: Will rising interest rates impact the viability of this and, potentially, other BTR projects?
MR BARR: I will interpret Mr Parton’s question to assume a significant movement in interest rates, as opposed to, say, 25 basis points or 50 basis points. I do not think small adjustments, at this point, are going to make a major difference; but it is clear that some of the institutional investors that the commonwealth and the states and territories will be working with are looking for a rate of return of between six and 11 per cent for these particular projects. That has been the clear position the super funds, for example, have put on the table. To the extent that, for example, a doubling in interest rates could impact, it would also depend on the nature of alternative investments; the mandate of the particular institutional investor in terms of, for example, social and ethical investment; and, in this instance, the source of capital, which would not be, in the case of a super fund, being borrowed from a commercial bank, for example. There would perhaps be a more fixed capital cost, as opposed to a variable one, in relation to these sorts of investments. Ultimately, they are financial decisions that institutional investors will need to make based on long-term certainty—that is the whole point of the model.
MS LEE: Treasurer, when do you expect construction to start and be completed at the Turner site?
MR BARR: It is, obviously, subject to a current process. Once we have seen the submissions that come back from the market, we will be in a better position to advise on those outcomes. This one is not the only build-to-rent project that has been proposed. Indeed, some are underway. The build-to-rent product is a spectrum product. I think there is a misunderstanding that—
Ms Lee: No, I specifically said “at the Turner site”.
MR BARR: Yes, but I am making a broader observation about build-to-rent. There are already build-to-rent projects that have either commenced construction or that have been proposed. There will be build-to-rent projects that will be built on land that the ACT government has put forward for that specific purpose. There will be build-to-rent projects undertaken entirely by the private sector on land that is privately owned, and there may well be a mixture of public and private partnership in relation to this new housing type.