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‘You’ll Own Nothing, and You Will Be Happy…’

Updated: Dec 1, 2023

You’ve no doubt heard of the investment company Blackstone.

They’re a behemoth in the world of investment and finance. With more than $730 billion in assets under management, the firm is a force to be reckoned with.

They’ve got their fingers in a lot of pies, from private equity to real estate to hedge funds, and they’ve been gobbling up assets and real estate over the years at a breakneck pace.

Most recently, Blackstone has also been eyeing up the Australian land market.

From the Australian Financial Review:

Blackstone… will step up its investment in build-to-rent in Australia, as it looks to increase its exposure to sources of inflation-beating growth in rental income… Just about everywhere we invest and through the data — not only in our real estate portfolio but of course to our whole Blackstone ecosystem — we do see inflation metrics rolling over, coming down, which we think is a positive sign,” Ms McCarthy said.
But the great news for us is that we have been preparing for a higher interest rate, higher inflation environment for a very long time.

80% of Blackstone’s portfolio of real estate investments is weighted towards assets that provide a strong cash flow. (Warehouses, rental housing, hospitality accommodation etc.)

And with news that Australia’s immigration could surge to 300,000 in 2022–23, coupled with record low vacancy rates. Blackstone wants to expand further into Australia’s build-to-rent sector.

If you’re not familiar with the concept of the build-to-rent (BTR) (rather than build-to-sell (BTS)) sector — you should be.

Over the last couple of years, BTR has been tipped as one of the biggest commercial asset hits, and its growth in the Australian market over recent years has been rapid, to say the least.

Put simply, build-to-rent is the corporatisation of the rental market.

Properties that are designed and constructed to be used exclusively for rental accommodation.

The developments are owned by large institutional landlords who manage and control the tenancies.

The model is already popular overseas.

In fact, it’s one that’s grown into a multitrillion-dollar asset class, with investors unsurprisingly leasing their developments for the highest rent possible.

For example, the US’ five largest corporate landlords own about 420,000 properties in total.

Germany’s largest landlord, Vonovia, has more than 330,000 properties alone.

Build-to-rent now accounts for one in five new homes built in England and one in four in London.

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