Australia’s Living Sector: Growth, Resilience and Capital Attraction

Australia’s living sector is evolving at pace. Structural undersupply, demographic shifts and a deepening pool of global capital are reshaping how housing is delivered and how investors allocate funds. Build-to-Rent (BTR), Purpose-Built Student Accommodation (PBSA), Retirement Living and Co-Living are moving from the margins to the mainstream, positioning the sector at the centre of Australia’s Real Estate future.

Australia’s population grew 1.7% in the year to December 2024, driven largely by net overseas migration (340,750), particularly temporary migrants and students (JLL Research, ABS). Western Australia recorded the fastest growth (2.4%), followed by Victoria and Queensland (both 1.9%). Meanwhile, housing delivery has fallen below historic levels, keeping national vacancy rates near record lows (1.2%) and fuelling rental growth. However, despite strong demand, rising construction costs and labour shortages continue to challenge project feasibility.

“There is a clear discrepancy between demand and supply. New housing delivery remains well below historic averages and population growth will continue to see rents rise to new levels,” notes Alex Wheeler, Head of Alternatives, Value and Risk Advisory. “But the trend is shifting quickly. With capital mandates expanding and delivery pipelines building, the next five years will see living transition into a core allocation.”

The Living sector has firmly established itself as a dominant force in Australia's commercial property market. According to JLL Research, the sector captured $2.175 billion in transactions in the first half of 2025, representing 13% of the total $16 billion market and positioning it nearly on par with the Office sector (14%).

In mature markets such as the US and UK, living assets account for 25-30% of institutional portfolios. The headroom for growth is clear, and capital is moving to close the gap, with a robust pipeline of $4.8 billion in Living sector assets currently on the market.

Momentum is building across the capital stack. Local developers, high-net-worth investors, superannuation funds and sovereign wealth groups are all turning towards Living. Landmark transactions in 2025 are highlighting immense investor confidence across Australia's Living sectors. This was demonstrated by Aware Super’s acquisition of a major build-to-rent project in Brisbane’s Fortitude Valley with a significant affordable housing component, alongside the record-breaking $3.85 billion purchase of retirement provider Aveo by Scape and the South Korean National Pension Service - the largest direct real estate deal in the nation's history.

“Investors recognise that living assets are underpinned by long-term demographic drivers,” says Wheeler. “We are seeing strong allocation across the spectrum – from super funds seeking scale in BTR to offshore investors partnering with local developers to unlock new supply.”

“As Australia’s population is concentrated within the major cities, home to close to 73% of the total population, newly completed developments are commanding premium rents coupled with high levels of occupancy, driven by strong demand from residents seeking to live closer to their workplaces. A prime example is Salta’s recently completed Fitzroy & Co Build to Rent project in Fitzroy North, which reached 98% occupancy within just a few months of its official launch.” McLaughlan said.

• Build-to-Rent (BTR): With 12,000 operational units, 3,600 under construction, 23,600 approved and 24,300 in planning, the pipeline is scaling rapidly. The achievement of premium rents is supporting development feasibilities, reinforcing investor confidence and fueling demand for similar projects in the Australian market. Even in typical Build-to-Sell established locations like Southbank, Docklands and South Yarra, there are strong levels of BTR take up, highlighting Melbourne as a key location where the sector is continuing to deliver finished, in-demand product.
• Affordable and Social Housing: Integrating Affordable and Social Housing has moved from a secondary consideration to a critical component of future residential development. This shift is driven by major government initiatives like the Housing Australia Future Fund (HAFF), which aims to deliver 40,000 new dwellings - 20,000 social and 20,000 affordable homes over five years from 2024, including vital accommodation for essential service professionals.
• Purpose-Built Student Accommodation (PBSA): Australia boasts nine universities that rank in the global top 100, yet PBSA provision remains well below international benchmarks. Annual bed delivery is set to average ~4,400 until 2030 – slightly short of historic levels. Demand for student beds currently outweighs the forecasted supply in major cities across Australia. The structural undersupply of student beds is an ongoing issue that needs to be addressed in 2025 - Australia’s penetration rate is on track for 2.9%, in UK it sits at 30% - demonstrating significant headroom.
• Co-Living: Still in the early-stages but gaining significant traction as an innovative solution to housing affordability, with developers adopting flexible models that attract capital from investors awaiting greater clarity around treatment of taxes and policy making in the Build-to-Rent sector. The advantage lies in its ability to offer the security of standard tenancy agreements while allowing operators the flexibility of shorter lease terms, enabling rents to be adjusted frequently to reflect market conditions. This trend is most pronounced in Sydney, where extreme market pressures and a distinct tax and planning treatment from BTR, which requires meeting specific legislative definitions to access concessions, making the city the clear epicentre for co-living investment in Australia.
• Retirement Living: An ageing population is fueling sustained demand. Institutional capital is beginning to recognise the long-term growth profile, positioning the sector for significant expansion. In addition, a new era of luxury, high end retirement living product is now being progressively rolled out across the country in response to a combination of the inherent wealth of Australia’s baby boomer, changing demands of the consumer and challenges in stacking low to mid spec developments.

Over the next three to five years, JLL expects the living sector will not only experience significant growth, but will set a new benchmark, outperforming traditional asset classes, for reasons such as:

1. Capital deepening and diversification – New mandates are being scaled as institutional investors reposition existing portfolios.

2. Demand resilience – Housing demand, particularly for quality rental product, holds strong even through softer economic cycles. 3. Hybrid and innovative models – Expect more BTR/Co-Living hybrids, modular construction and adaptive reuse, all improving feasibility and returns.

4. Policy alignment – Government is increasingly recognising the role of private capital in solving affordability, creating pathways through incentives and partnerships such as the Housing Australia Future Fund.

5. Market maturation – As execution becomes repeatable, pricing stabilises and risk premiums compress, liquidity will deepen.

This powerful momentum in the living sector is mirrored by JLL’s own strategic investment in its advisory platform and expertise. The expansion of JLL’s National Living Valuations team – including Alex Wheeler, John McLaughlan, and the addition of Georgie Bowden as Associate Director and Maddie Pizzey as an Assistant Valuer, strengthens JLL’s ability to support clients as they navigate this next phase of unparalleled growth.

“At JLL, our national integrated approach mirrors what we are seeing from the superior operators in this asset class - we have strong capability and market knowledge across every Living sub-sector, from BTR and Co-Living to PBSA and Affordable & Social housing.

“This positions us uniquely to advise clients on the full spectrum of opportunities, whether they're institutional investors seeking premium assets, private developers looking to repurpose sites, or government entities deploying capital for social outcomes,” Wheeler concludes.

To explore opportunities within the Living Sector and how JLL can support your growth, get in touch with our team.