Developers targeting the fast-growing build-to-rent sector must create sustainable buildings that will hold their value over the next 40 years or they will be left with stranded stock such as older office buildings that struggle to find tenants in the current market, a new report says.

The professionally managed rental sector accounts for just 0.2 per cent of Australia’s housing stock – or 23,000 homes in use or development – and could grow to 350,000 over the next five to seven years, requiring homes to hold their value for decades, the report by developer and investor Model warns.