Australia's
Alternative
Property Market
NDIS/SDA and Co-Living Investment Intelligence for Australian Property Professionals
$16.4B
SDA Package
2,054
VIC Shortfall
10K+
Co-Living Units
15.4%
Market CAGR
DECEMBER 2025 EDITION
Melbourne's Specialist Property Builder
Important Disclaimer
This report is provided for general informational purposes only and does not constitute financial, investment, legal, or tax advice. The Australian Government does not guarantee returns on any property investment, including NDIS/SDA or co-living developments.
Key Considerations
- • All property investments carry risk, including the risk of capital loss and vacancy
- • Projected yields cited in this report are industry estimates and not guaranteed outcomes
- • Readers should conduct their own due diligence before making any investment decisions
- • Independent professional advice should be sought for individual circumstances
Executive Summary
Australia's property development landscape is being reshaped by two high-growth alternative asset classes: NDIS Specialist Disability Accommodation (SDA) and co-living/rooming house developments. Both sectors offer compelling opportunities for developers, investors, and their advisers to access higher-yield investment products and build strategic partnerships with specialist builders.
This report provides market intelligence on both sectors, examining demand drivers, regulatory frameworks, yield expectations, and risk factors that developers, investors, and advisers need to understand when evaluating these asset classes.
Market Snapshot: Two High-Growth Sectors
| Metric | NDIS/SDA | Co-Living |
|---|---|---|
| National Demand Gap | 12,000+ places needed | Structural undersupply |
| Industry Yield Claims | 8-15% (with caveats) | 8-12% gross |
| Traditional Residential | 3-5% gross | 3-5% gross |
| Regulatory Complexity | Very High | High |
| Specialist Builder Required | Essential | Highly Recommended |
Sources: Summer Foundation, Knight Frank Co-Living Report 2025, NDIS Commission, industry research.
NDIS Specialist Disability Accommodation
1.1 Market Fundamentals
The National Disability Insurance Scheme (NDIS) represents one of Australia's largest social infrastructure investments. According to the NDIA's latest quarterly report, the scheme now supports approximately 739,414 participants with an annual cost of $46.3 billion.
Specialist Disability Accommodation (SDA) is the housing component of the NDIS, providing purpose-built or modified housing for participants with extreme functional impairment or very high support needs. SDA funding reached $411 million in the first three quarters of FY2024-25, reflecting the scale of government investment in this housing category.
739K
NDIS Participants
$46.3B
Annual Cost
$411M
SDA Funding YTD
Key Market Insight
The NDIS represents Australia's largest social infrastructure investment, with SDA funding growing at double-digit rates annually. The structural mismatch between approved funding ($411M YTD) and available housing creates a compelling opportunity for specialist developers who understand participant matching requirements.
1.2 The Supply-Demand Gap
"Approximately 24,500 NDIS participants currently have SDA funding approved in their plans. However, only around 15,000 are housed in appropriate SDA dwellings. An additional 12,000+ SDA places are needed to meet current demand."
— Summer Foundation
According to the Summer Foundation, an independent not-for-profit organisation focused on disability housing research, approximately 24,500 NDIS participants currently have SDA funding approved in their plans. However, only around 15,000 are housed in appropriate SDA dwellings.
Victoria Snapshot
Victoria has the largest concentration of SDA-funded participants. NDIA data indicates:
7,144
SDA-funded participants
5,090
Currently housed in SDA
2,054
Actively seeking accommodation
Victoria SDA Supply vs Demand
Total Funded
Participants
Currently
Housed
Shortfall
Immediate Need
Source: NDIA Q2 2024 Data
1.3 Regulatory Framework and Builder Requirements
SDA properties must meet specific NDIS design standards to qualify for funding. The regulatory framework includes four distinct design categories:
High Physical Support (HPS)
For participants requiring highest level of physical assistance
Fully Accessible
Full wheelchair accessibility throughout
Robust
Enhanced durability for participants with complex behaviours
Improved Liveability
Enhanced physical access and improved livability features
Certification Requirements
The SDA Design Standard specifies 25 detailed design elements covering structural provisions, access, safety, and assistive technology integration. Properties require certification through a two-stage process:
Stage 1
Design Assessment (pre-construction)
Stage 2
As-Built Assessment (post-construction)
SDA providers must also maintain NDIS provider registration. These requirements create significant barriers to entry for general builders without specialised NDIS construction experience.
1.4 Investment Considerations and Risk Factors
Industry marketing materials frequently cite SDA gross yields of 8-15%. However, several critical factors must be considered:
Government Position
The NDIA has explicitly stated that it "does not guarantee investor returns" on SDA properties.
Vacancy Risk
SDA properties can experience extended vacancy periods. Unlike traditional rentals, finding qualified SDA tenants requires matching specific disability support needs with property design categories.
Media Scrutiny
The ABC Four Corners investigation "Empty Promises" (2022) documented investor losses exceeding $100 million in SDA properties that remained vacant.
Market Concentration Risk
Geographic oversupply in certain areas can significantly impact occupancy rates.
Success in SDA requires specialist builder expertise, thorough due diligence, and clear understanding of participant matching processes.
Co-Living and Rooming House Developments
2.1 Market Fundamentals
Co-living (also known as rooming houses in Victoria) represents a rapidly growing segment of Australia's residential property market. According to Knight Frank's 2025 Co-Living Report, national supply has surpassed 10,000 units, including completed, under construction, and planned developments.
The global co-living market was valued at approximately USD $7.7-15 billion in 2024, with projections suggesting growth to USD $16-32 billion by 2033-2034, representing a CAGR of 7.5-15.4% depending on the research source. Asia-Pacific accounts for approximately 40% of global market share.
10K+
National Co-Living Units
40%
Asia-Pacific Market Share
Global Co-Living Market Growth
CAGR: 7.5-15.4% depending on research source
2.2 Demand Drivers: Australia's Housing Affordability Crisis
Several structural factors are driving sustained demand for co-living accommodation:
Rental Market Pressure
1.8%
National vacancy rate (Dec 2024)
Below 2.5% balanced threshold
$627
Median weekly rent (national)
8.5% YoY increase
32.9%
Income required for rent
CoreLogic December 2024
+48%
Rent increase since COVID
National average
Household Formation Trends
- • 26% of Australian households are single-person households (ABS 2021 Census)
- • Projected to grow to 26-28% of all households by 2046
- • Average household size declined from 2.6 people (2016) to 2.5 people (2021)
- • Shift to smaller households requires approximately 160,000 additional dwellings
Supply Constraints
177K
Dwellings completed 2024
223K
Required to meet demand
-262K
Projected shortfall vs Accord
- • Only 177,000 dwellings completed nationally in 2024, far below the 223,000 required
- • National Housing Accord target of 1.2 million homes over five years projected to fall 262,000 short
- • Melbourne housing construction near decade lows
National Housing Supply Gap
Source: National Housing Finance and Investment Corporation 2024
2.3 Victorian Regulatory Framework
Victoria has specific regulatory requirements for rooming houses that create compliance barriers for inexperienced developers:
Building Classification
Under the National Construction Code (NCC), small-scale rooming houses typically fall under Class 1b classification: boarding/guest/hostel-type buildings under 300m² with fewer than 12 residents. Properties exceeding these thresholds require Class 3 certification with materially different requirements for fire safety, egress, amenity, and accessibility.
Licensing and Registration
Operator's Licence
Rooming House Operator's Licence required (3-year term, issued by Business Licensing Authority)
Council Registration
Property registration with local council mandatory
Health Registration
Prescribed Accommodation registration with Department of Health
EHO Inspections
Regular Environmental Health Officer (EHO) inspections
2024-2025 Minimum Standards Updates
The Victorian Government has introduced new minimum standards under the Residential Tenancies (Rooming House Standards) Amendment Regulations 2024:
Fixed Heaters Required
All heaters must be fixed (not portable)
Electric Heating & Safety
All heaters must be electric (not gas); Blind cord safety standards mandatory
Energy Efficiency Standards
Ceiling insulation, draught-proofing, and cooling requirements
Heating Efficiency Ratings
Minimum energy efficiency ratings for heating systems
Properties built to current standards by specialist builders will be compliant with future regulations, while older conversions may require costly retrofitting.
2.4 Investment Returns and Yield Analysis
Co-living properties generate higher yields than traditional residential investments through multiple income streams from individual tenancies.
| Investment Type | Typical Gross Yield |
|---|---|
| Traditional House (Melbourne) | 2.95% - 4.9% |
| Traditional Unit (Melbourne) | 4.4% - 5.4% |
| Melbourne CBD Unit | 8.6% |
| Purpose-Built Co-Living/Rooming House | 8% - 12% |
Sources: CoreLogic April 2025, OpenAgent 2025, Knight Frank Co-Living Report, industry estimates.
Yield Premium Factors
| Factor | Detail |
|---|---|
| Multiple Income Streams | Co-living property renting 5 rooms at $250/week generates $1,250/week vs $500/week for traditional single tenancy |
| Reduced Vacancy Risk | Individual room vacancies have less impact than whole-property vacancy |
| Market Positioning | Targets affordability-constrained renters in an undersupplied market segment |
2.5 Risk Factors and Considerations
Regulatory Compliance
Non-compliant properties face council enforcement, fines, and potential closure orders.
Management Intensity
Multiple tenancies require more active property management than single-tenancy rentals.
Location Sensitivity
Success depends heavily on proximity to employment, transport, and amenities.
Council Attitudes
Some councils actively support rooming house development while others impose restrictive zoning.
Future Compliance Costs
Properties not built to current standards may require expensive retrofitting to meet 2027 and 2030 requirements.
Co-Living Investment Risk Assessment Matrix
| Lower Likelihood | Higher Likelihood | |
|
High Impact |
Future Compliance 2027/2030 standards |
Regulatory Risk Non-compliance penalties |
|
Medium Impact |
Location Selection Site-dependent success |
Management Load Multi-tenancy complexity |
|
Low Impact |
Tenant Demand & Occupancy Strong market fundamentals • Structural undersupply • Affordability-driven demand |
|
The Financial Adviser Distribution Channel
Both NDIS/SDA and co-living investments are increasingly being distributed through financial adviser networks, creating opportunities for developers and builders with appropriate expertise.
3.1 Market Size and Opportunity
15,643
Financial Advisers (ASIC)
625K+
SMSFs in Australia
$990.4B
SMSF assets under management
$200.5B
SMSF real property holdings
SMSF property investment growing at approximately 7% annually
3.2 Why Advisers Recommend Alternative Property
Financial advisers are increasingly recommending NDIS and co-living properties to SMSF clients because:
3.3 Institutional Interest
Major institutional investors have entered the alternative housing market. Macquarie Asset Management manages a portfolio of SDA properties, while MA Financial Group operates the Disability Accommodation Fund. Knight Frank reports that institutional investors are increasingly backing Build-to-Rent and co-living developments, with nearly £1 billion invested in UK co-living developments since 2020 and similar trends emerging in Australia.
Strategic Implications
4.1 Why Specialist Builder Partnerships Matter
Both NDIS/SDA and co-living developments require specialist construction expertise that most volume builders cannot provide:
NDIS/SDA Requirements
- • SDA Design Standard certification
- • Assistive technology integration
- • Four design category expertise
- • Two-stage certification process
- • NDIS provider registration knowledge
Co-Living Requirements
- • NCC Class 1b compliance
- • Fire safety and egress requirements
- • Energy efficiency standards (2027+)
- • Council registration and licensing
- • Multi-tenancy design optimisation
4.2 Competitive Positioning Opportunity
Developers and investors with established specialist builder partnerships can access these markets more effectively by:
Compliant Construction
De-risked construction solutions for developers
Higher Yields
Access alternative asset classes
Adviser Networks
Qualified development access
Expert Regulatory Navigation
Reduced project risk through builder expertise
4.3 Market Entry Considerations
Developers and investors evaluating entry into alternative property development should consider:
The Opportunity
Window Is Open
Australia's NDIS/SDA and co-living markets represent genuine opportunities for developers and investors seeking higher-yielding alternative asset classes. Both sectors benefit from structural undersupply, strong demographic tailwinds, and increasing institutional interest.
However, these opportunities come with significant complexity. Regulatory requirements, compliance obligations, and investment risks are substantially higher than traditional residential property.
Success in these markets requires specialist builder partnerships, thorough due diligence, and clear communication of risks to investors.
Those who develop expertise and partnerships with specialist builders in these alternative asset classes will be well positioned as demand grows from financial advisers, SMSFs, and institutional investors seeking differentiated property solutions.
Ready to Explore Your Options?
Enable Group specialises in NDIS/SDA and Co-Living construction across Victoria. Our team brings specialist expertise in complex regulatory environments to deliver compliant, future-proofed developments.
Schedule a Consultation
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Contact Enable GroupMelbourne's Specialist Alternative Property Builder
📞 1300 000 868 | ✉️ [email protected]
enablegroup.com.au