Property development decisions in Western Australia hinge on choosing the right delivery model. Two common strategies are build to sell, where completed dwellings are sold to individual buyers, and build to rent, where the developer retains ownership and leases the property. These approaches involve different planning, risk profiles, return expectations and legal frameworks.
The following article explains each model, how the WA market is evolving, the advantages of each strategy, how returns can be realised, the role of strata title in development and how Novus Projects can support your project from concept to completion.
What is Build To Sell?
A build to sell strategy involves constructing a residential property with the intent to sell individual units to owner-occupiers or investors once the development has finished. In this model, developers often secure financing against projected sales revenue and focus on consumer demand, product mix and timing to optimise sales outcomes.
The return on investment is realised through sale proceeds and risk exposure after settlement transfer largely to purchasers. Key considerations in this approach include current buyer demand, pricing expectations and design features that appeal to the WA residential market.
What is Build To Rent?
Build to rent describes developments constructed specifically for long-term lease rather than sale. These projects remain under single ownership or institutional ownership after completion and are then rented out to tenants under residential tenancy agreements. In the context of WA, the Government has recently introduced incentives intended to encourage this model.
Eligible build to rent developments can access a 50% land tax exemption for up to 20 years, aimed at increasing rental housing stock in the state, particularly in areas where rentals are in short supply. The WA Government also operates a $75 million Build to Rent Kickstart Fund, administered by Keystart, which offers concessional finance to support project viability and secure rental accommodations. Eligible developments must meet certain criteria such as providing a minimum number of dwellings and committing to long-term rental provision.
The Western Australian Property Market: Current Conditions
Western Australia’s rental market has experienced sustained pressure in recent years, with rental vacancies remaining low and demand for secure housing strong. This context has encouraged government support for build to rent initiatives to augment housing supply. Meanwhile, traditional build to sell projects remain sensitive to buyer demand and market pricing.
Given accelerated costs across construction sectors nationally and locally due to labour and material pressures, developers must account for cost trends and finance structures when evaluating either strategy.
Build To Sell: Key Advantages and Considerations
Build to sell projects allow developers to receive capital returns relatively quickly after construction completion. In strong price markets, pre-sales can be used to mitigate financing risk before practical completion, supporting cash flow management. This model is well-suited to developers seeking discrete project cycles and immediate revenue realisation.
However, build to sell is dependent on market absorption rates, buyer sentiment and pricing competition. Developers must align delivery with demand forecasts to mitigate any risks of extended holding costs or price adjustments.
Build To Rent: Key Advantages and Considerations
Build to rent delivers ongoing rental income streams and potential long-term capital appreciation. The WA Government’s incentives, such as land tax concessions and low-cost finance through the Build to Rent Kickstart Fund, are specifically designed to encourage institutional and private investment in long-term rental housing solutions.
These incentives improve project economics for build to rent developers and can support delivery of affordable rental options. Successful build to rent projects require a focus on tenancy management, asset maintenance and community standards to attract and retain tenants over time.
Side-By-Side Comparison
Choosing between build to sell and build to rent depends on the project objectives and goals. Build to sell returns in a finite period and transfers ownership risk to buyers, while build to rent positions the developer or investor as a long-term landlord with revenue tied directly to occupancy and rental rates.
Build to sell typically suits developments targeting first-home buyers, downsizers or investors seeking ownership, whereas build to rent suits those looking specifically for stable income streams and portfolio diversification. Each model has unique financing, sales and operating implications that need to be weighed against both the market conditions and your strategic goals.
Capital Growth Vs Rental Yield: How Each Strategy Delivers Returns
Returns for build to sell projects are largely realised through capital growth, meaning profits are tied to the appreciation of property value between construction and sale. Developers must anticipate how market pricing might move by the time units are completed and sold. Build to rent, in contrast, focuses on rental yield, which is the recurring income generated through tenant leases relative to property value.
In WA, rental yields for apartments and units have been moderate but consistent, with typical gross yields around 5-6% for certain unit types in recent times, highlighting the ongoing strengthening of the rental market.
Strata title’s role in build to sell developments
For build to sell developments, strata title is frequently the legal structure used to allow individual ownership over parts of a larger development. Under Western Australia’s Strata Titles Act 1985, strata schemes allow multiple lots, like apartments, to be individually owned while sharing ownership and responsibility for common property.
Strata title is fundamental to enabling the individual sale of lots within a development and establishing the framework for ongoing management of shared elements, such as driveways, gardens and building systems.
How Novus Projects Can Help
Novus Projects brings local market insight and development experience to both build to sell and build to rent strategies in Western Australia. Our team supports feasibility analysis, strategy selection, project planning and execution, all to ensure development objectives are aligned with both market conditions and incentives.
Whether optimising your product mix for sale or optimising your assets for long-term rental yield, Novus Projects ensures clarity every step of the way, helping you to achieve outcomes that are commercially sound and adaptable to WA’s evolving real estate landscape. Get in touch for your next project.