Thousands of Specialist Disability Accommodation (SDA) dwellings are needed to meet Australia’s accessible housing needs. Private investors play a significant role in funding the considerable build and refurbishment of housing that is needed. This investment plays an important role in supporting the Australian Government’s vision for a market-based system and reduces the pressure on public funds. SDA is the biggest impact investing opportunity in the country, and is ready to transition to a new phase of growth. The SDA market could grow to $10-12 billion, but is currently estimated to be worth just over $2.5 billion. In order to continue growing, large-scale investors need confidence in the market.
The Summer Foundation convened the SDA Investor Think Tank in early 2021 in order to understand challenges and opportunities in the market, and to present a collective voice to government. Its purpose was to inform and support active and appropriate market stewardship. Think tank contributors included fund managers who collectively have invested nearly $650 million in the SDA market to date, financing nearly 1,000 places for NDIS participants.
During the think tank, fund managers identified 2 areas that require attention to propel the SDA market into the next phase of its development. Firstly, there is an opportunity for the NDIA to introduce a more structured engagement framework with the market, and mechanism for clear market signalling. Secondly, a number of related factors are distorting the pipeline of SDA demand, including a lack of participant demand activation and opaque decision-making processes by the NDIA. A number of key issues were identified that will continue to weaken market confidence and the flow of capital to build new SDA if not addressed.
Based on these issues, 8 recommendations were developed that fund managers believe will help restore and build investor confidence to deploy capital.