Hybrid Development the key for NDIS housing

Hybrid development is the term coined by Aligned Disability Investments CEO Arthur Naoumidis to describe a shared property development strategy used by the Aligned Disability Property (ADP) Fund that incentivises investors and delivers disability housing solutions in the areas of strongest demand.

The metropolitan areas of our major cities are where greater numbers of people with disability live but it is also where land is most expensive to buy. This has resulted in most Specialist Disability Accommodation (SDA) housing developments being developed in regional & greenfield locations – not where the demand is strongest.

A hybrid development offers flexibility by way of structure and choice by spreading the cost of the land over a component of residential property and a component of SDA accommodation.

The formula is roughly two residential apartments for each SDA apartment.

The hybrid model works by selling the residential component to cover much of the land cost and the debt component of construction whilst retaining the SDA component in a fund to provide rental income to investors.

The profit from the sale of the residual equity component is either used to allow for redemptions or rolled over to the next hybrid development where a little more equity from new investors is added, and so it goes.

The ADP Fund will retain the completed SDA properties with a view to building an institutional sized portfolio of high yielding SDA rental properties which would then be offered for sale to institutional investors. This would provide investors with the prospect of significant capital gains whilst targeting an attractive income during the hold period.

All good investments have an exit strategy and so investors will get the option of redeeming their investments whenever the ADP Fund sells an asset. Additionally, investors will vote at the end of the 5 year term of the fund whether to renew it for another term or not.

The hybrid model is simple with a natural and attractive exit strategy and a high income return with the security that government benefit payments provide.

Aligned Disability Investments and BrickX are making shared SDA housing investment a viable proposition for small investors including SMSFs in a way not previously available.

As a single investment class with high government backed rental income the ADP Fund is grouping multiple properties in key residential areas to give investors diversification.  What this means is investors get a spread of properties in the strongest rental market which is major cities as opposed to regional NDIS developments with less disability demand.

Regional areas are well serviced but at the cost of the denser population centres like Melbourne, Sydney and other capital cities.

There are strong statistics supporting investment in this class of property;

  • 3 million Australians living with disability
  • NDIS currently fund support and services for over 554,000 Australians
  • Estimates put disability services to reach 741,000 people by 2026 – 186,000 new participants in the next 4 years
  • There are currently 7,720 NDIS dwelling
  • 1,329 participants are seeking an NDIS dwelling as at 31/3/23
  • 4,378 participants seeking an alternate NDIS dwelling as at 31/3/23
  • 2,536 new dwelling needed by 2026

*NDIS Quarterly Report to disability Ministers 31/3/23

Investors and financial advisers should consider SDA housing under the ADP Fund model as part of a diversified largely income portfolio.


Arthur Naoumidis
CEO, Aligned Disability Investments
0411 958 084

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