Victoria: Consolidation, maturity and the cost of uncertainty

Victoria remains the cornerstone of Australia’s Build to Rent (BtR) story. As the country’s largest BtR market by total volume, Melbourne was the first city to institutionalise the sector at scale, providing the operational proof that underpinned national investor confidence. However, as the sector matures, Victoria's role is evolving.

A mature market entering a consolidation phase

Today, Victoria accounts for approximately 45 per cent of Australia’s BtR projects, with a large and established operating base. This maturity brings advantages, including deep market knowledge, proven demand and established management platforms, but it also indicates a transition from rapid expansion to consolidation.

Policy and planning uncertainty weighs on new investment

The most significant challenge facing Victoria’s BtR sector is policy uncertainty. While the state offers a 50 per cent land tax reduction (for a fixed period of 30 years) and exemptions from absentee and foreign owner surcharges for qualifying BtR assets, broader tax settings (particularly Foreign Purchaser Additional Duty) have weighed heavily on new investment decisions. For offshore capital, the cumulative impact of stamp duty and surcharges has materially reduced feasibility, prompting many platforms to pause or redirect capital elsewhere.

Planning complexity has compounded these challenges. Lengthy approval timeframes and inconsistent pathways across municipalities have increased holding costs and delivery risk, even in locations with strong rental fundamentals. As a result, while Victoria’ existing BtR assets continue to perform, new projects have slowed.

Fundamentals support long-term growth

This does not diminish Victoria’s long-term relevance. Melbourne, the state’s capital, remains a deep rental market with strong demographic drivers, and its existing BtR stock provides a critical foundation for sector wide benchmarking, data transparency and operational maturity. As investor focus moves from development risk to income durability and platform capability, Victoria’s established assets are well placed to demonstrate BtR’s defensive characteristics.

Over the medium term, renewed growth in Victoria will depend on improved tax reform, transparency and planning reform to show that the state is “open for business”. Without this, the state risks ceding its early mover advantage. With it, Victoria has the potential to reengage capital and transition from consolidation into its next phase of BtR evolution.

Understand what comes next for Victoria

For a deeper dive into Victoria’s BtR market, including pipeline maturity, policy impacts and how Melbourne fits into the national rebalancing of capital, read BDO’s 2026 Build to Rent report.