Turning empty office buildings in Australia’s CBDs into housing via a process known as asset repurposing could help solve the country’s housing affordability issues, according to a new report from PRD.
Titled Alternative Solutions: Solving the Housing Supply Issue, the report analyses five housing models from overseas markets that are either absent or in their nascent stages in Australia and assesses whether they may be a suitable solution for solving local housing affordability issues.
It identifies asset repurposing as one of these solutions, pointing to successful projects in Canada, Chile and the United Kingdom as proof of the concept’s potential.
“Due to the pandemic, the continued rise of flexible working conditions and online shopping were two key factors rendering many traditional office and retail buildings vacant – eventually leading to obsoletion,” the report states.
“Asset repurposing would see these vacant buildings being remodelled or reconfigured into another asset class such as infrastructure (for example into a school or hospital) or into a type of accommodation (whether student accommodation, commercial hotels/motels, or units for the rental market).”
Report author and PRD Chief Economist Dr Diaswati Mardiasmo said looking to alternative housing models that had resulted in successful outcomes overseas could help inspire local policymakers.
“We know the root to our housing crisis is an under supply,” Dr Mardiasmo said.
“The good news is we are not alone in this issue – there are many other countries who have or are currently experiencing this.”
PRD Managing Director Todd Hadley said the firm wanted the paper to act as a conversation starter.
“The Housing Supply Solution report provides a wide variety of options, all of which have been evaluated against a set of criteria,” Mr Hadley said.
“This gives a richer landscape for different governments across Australia to select and adopt a solution that suits their area best.”
Other solutions canvassed in the report include public private partnerships (PPPs), modular buildings, build-to-rent projects and community-based land initiatives.
Public private partnerships could involve government providing land for a private partner to develop, with the aim of providing affordable housing.
The report points to Ireland’s Social Housing Bundles project as an example of the model being successfully used to provide low-income housing.
The report highlights the potential to use modular housing, which are transportable and built offsite, in conjunction with the 2032 Brisbane Olympics to provide accommodation to athletes which can then be repurposed following the conclusion of the event.
Build-to-rent projects, in which a single company retains ownership of an entire building with the purpose of providing rental accommodation, could potentially help solve Australia’s rental crunch, the report found.
However, it identified the tendency of current build-to-rent projects to gravitate towards providing market-rate rental accommodation as a potential weakness of the model.
“BTRs in Australia must have a portion accessible to lower income households as per localised data and not just a set percentage below its market offering,” the report states.
“This will maximise its impact on reducing the affordable housing shortage.”
It was also important that build-to-rent projects provided a variety of floor plans so that buildings remained a viable option for families, the report noted.
