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Build-to-rent: the state of the art and the Morning Capital model


What is residential Build/t-to-Rent and what are the services that characterize it?

What is Build/t to Rent? On 03/27/2023 at 12.26 p.m., we put that question to ChatGPT, the artificial intelligence system that is revolutionizing the world. Here is the answer:


Build-to-rent (BtR) is a type of real estate development in which an investor or developer builds a purpose-built residential property with the intention of renting it out to tenants on a long-term basis. Unlike traditional residential real estate development, which usually involves the construction of properties to be sold to individual homeowners or investors, build-to-rent developments are designed and built specifically for the rental market.

BtR developments can take several forms, including condominiums, townhouses and single-family homes. Usually, they are managed by a professional property management company that takes care of renting, maintenance and other aspects of property management.

The aim of Build-to-Rent is to create high-quality, long-term rental accommodation that meets the needs of modern tenants, who are increasingly on the look out for flexible, affordable and well-managed rental properties. BtR developments often include a number of amenities and services, such as on-site maintenance, 24/7 security, shared spaces and other features that make them attractive to tenants.

For investors, Build-to-Rent can offer a stable and predictable source of rental income, not to mention the potential for long-term capital appreciation. For tenants, BtR developments can provide high-quality rental accommodation that meets their needs and provides a sense of community and security.

Build-to-Rent in Italy

On the whole, the above overview corresponds to reality, however some clarifications should be made.

Although there is currently much talk of Build/t-to-Rent, in Italy there are still no significant volumes of stock dedicated to this type of business. This business model is in its early stages compared to other European countries such as Germany or the UK.


What is Build/t-to-Rent (BtR) for Morning Capital?

Morning Capital is one of the first Real Estate service providers to have launched BtR projects in Italy featuring a significant digital component.


Based on our experience, the minimum requirements for applying the BtR model involve initiatives that generate at least € 350,000 in income from leases on property with over 30 rentable units and more than 2 amenities (spaces available to tenants in which they can carry out activities consistent with the location of said spaces).

Outside the basic requirements, we advise our investor clients not to apply the BtR model but to turn to other more traditional management criteria.

Our role

In the field of Build/t-to-rent initiatives, we position ourselves as solution integrators, dealing with the complete cycle of related activities and services: advisory, admin management, fiscal, technical and commercial, along with the wide range of activities that fall within the sphere of post-rent services.

  • On the principal's side, activation of the BtR model starts with an advisory process aimed at drawing up a business plan in line with company needs and needed to define the product, target customers and, therefore, the position of the initiative.
  • On the tenant's (user's) side, the process offered by BtR starts with profiling, support in the choice of real estate units, their configuration, reservation and renting, all performed entirely online using a digital platform.

The configurator

We have brought into real estate an experience already familiar to digital users and typical of other sectors (i.e.: automotive, consumer goods): through an apartment and optionals configurator, the user gets to "put the home in the shopping cart" becoming the creator of his/her own home configuration.

The system includes all the activities typical of online purchasing: accreditation, payment in the app, uploading and downloading of documentation, right up to the signing of the rental contract.

The user experience

It goes without saying that the user experience is radically different compared to the recent past, when the end user had to go to an info point and commence negotiations with the sales staff. As anyone who has had the opportunity to introduce innovations through digital transformation knows, the extraordinary simplification achieved reveals a composite structure of activities and processes which, using technology and digitalization, is arranged to offer (i) the end user a much more user-friendly experience and one that corresponds with the search criteria and (ii) the service provider a linearity that greatly facilitates the planning and management of routine and unscheduled activities.

The post-rent service is a panacea for rental property owners; in fact, the experience does not end with the signing of the contract, but continues thanks to an integrated Phigytal (physical/digital) concierge system and the presence of a community manager.


Home Easy Rent®

The BtR model proposed by Morning Capital has a registered trademark Home Easy Rent® that distinguishes it and is based on a management system that combines tradition and innovation, offering the user the opportunity to experience the benefits of a full digital approach. Integration with an advanced Phigytal concierge service, managed through the Morning Care® My Living app, completes the experience, extending support from the unit choice phase to the release of services connected to the property and the property's tenants.

Morning Care® My Living makes it possible to: book amenity spaces, interact with the manager for technical and administrative issues, request a multitude of personal services in the app and access the building, own home and amenities using electronic keys. The possibility of interacting with a highly digitalized system makes it possible to offer a peaceful, swift and safe experience.

Case history: Flat Tower – Parco Vittoria, Milan

Flat Tower was the first pilot project in which the Home Easy Rent® system was applied. Set up in January 2020.

  • 66 real estate units, all configured by the user through 3 furnishing moodboards made available by the system;
  • 4 amenities (gym, temporary apartment, co-working, party room);
  • The building was made 100% profitable in 9 months;
  • 0% vacancies in the first 2 years of business;
  • €1,750,000 in rental income;
  • average stay approximately 14 months;
  • 75% use of amenities, a result way higher than the market average.


How a Build/t-to-Rent project is developed: application of the Home Easy Rent® system

Our model involves 4 distinct steps:

Step 1 – Initiative conception and positioning, through market studies, territorial marketing analysis and proposal identification. Architects and interior designers define the furnishing moods, engineering the digital product libraries.

Step 2 – Asset Managers, engineers and Project Managers identify the reference contractors for supplying the furnishings, who are then employed for the procurement, assembly and/or finishing of the product.

This step is completed with negotiation on the detailed definition of product cost and the supply chain plan.

Step 3 – Unit configuration Show flats are set up focusing on an experience that involves the 5 senses (hearing, smell, sight, touch, taste), replicating the digital model on a real level.

Fase 4. Customization of the Web platform with graphic design, brand design, launch of the marketing campaign to initiate lead generation with analysis of neuro-marketing processes and CRM. Once the online marketing process has begun, the Customer journey begins.

A Home Easy Rent® project involves a team of 15 different professionals.


What does the Morning Care® My Living Phygital Concierge service offer in Flat tower?

Morning Care® My living is the Phygital concierge at the disposal of all tenants. After mapping the target/existing profiles in order to identify the type of amenities to be included in the intended use of common and/or private spaces, 4 amenities were created and a digital noticeboard was installed for conducting paperless communication.

The Morning Care® My living app allows user to:

  1. access amenities by booking spaces via a booking engine;
  2. purchase services to be performed within the amenities by external parties (personal trainers, home chefs, study support staff, etc.);
  3. purchase people-to-people services via integrated digital platforms (babysitting, dog sitting, food delivery, medical assistance, car wash with valet service);
  4. use the proprietary electronic lock for entering the building, own home or the amenities;
  5. automation of Amazon lockers integrated in the app.


A new line of business

For Morning Capital, residential BtR falls within the Advanced Business Services line of business, characterized by services generated by transforming traditional (analog) processes into digital ones (digital twin). This is a business line made up of innovative, digital and sustainable projects and services.


What Build/t-to-Rent is not

As previously described, BtR is a system connected to the way an asset is used. BtR involves the principle of an inherent management cycle: going from design, to construction, to pre- and post-rent management, with a significant digital component.

  • Offering a space, albeit furnished, to a tenant is not BtR;
  • providing a building with common spaces and/or activities is not BtR;
  • managing a rental process through common digital platforms is not BtR.

A BTR project has its basis in investor "assistance" on the one hand, and in the total management of the entire rental cycle for users on the other.

The allocation of capital to this type of investment, the planning, design, positioning, market offer, realization, marketing and management of all processes (administrative, technical, commercial) constitute the value supply chain in the BtR process.

The challenges of Build/t-to-Rent in Italy

The first build/t-to-rent projects are found in large Italian cities and are still in the medium-high price range One of the challenges facing operators and investors will be the democratization of the BtR service offer. This objective will permit scalability of the model.

In the same way that the hospitality sector offers different services depending on the category to which the structure belongs (3 stars, 4 stars, 5 stars, 5 stars Luxury), BtR projects will also have to offer users the same flexibility, thanks to integration of digital technologies. It will be possible to define projects with different levels of services and pricing depending on the reference target.

What AI says about the BtR challenges in Italy

We close with an answer to a question put to AI: “Why are residential build-to-rent projects in Italy struggling to take off?”.

Apart from a clear inaccuracy regarding investment returns, which in Italy are higher than in other countries where the BtR market is more mature, there are some interesting aspects to consider.

There are several reasons as to why residential Build-to-Rent (BtR) projects in Italy are struggling to take off. Some of the main reasons are:

Regulatory complexity: the Italian real estate market is known for being very complex from a regulatory and administrative point of view, which makes it difficult for investors to implement BtR projects efficiently and competitively.

Low availability of land: the Italian real estate market is characterized by a low availability of land, which makes it difficult for investors to find suitable sites on which to construct BtR projects.

Low returns: returns on real estate investments in Italy are generally low compared to other countries, which makes the idea of building BtR projects less attractive to investors.

Home Buying Culture: in Italy, home ownership is still highly considered, which makes it more difficult to convince potential tenants to choose long-term rental as a housing solution.

Lack of BtR awareness: BtR is still a relatively new concept in Italy, and many people, including potential tenants, may not be aware of the benefits offered by this type of housing solution.

However, despite these obstacles, there are positive signs indicating an increase in interest in Build-to-Rent in Italy, and the sector is expected to continue to grow over the coming years. Italian authorities are also considering the introduction of new measures aimed at incentivizing investment in the BtR sector, which could help unlock the potential of this market in Italy.

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