Build to Rent sector investment reaches record high

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Investment in the Build to Rent (BTR) sector reached a record high in 2018 with almost £4bn of new funds allocated to the sector according to Bidwells Build to Rent Summer 2019 Analysis

The Build to Rent Summer 2019 analysis also found that almost two-fifths of these transactions were forward funded as investors seek scale in key investment locations.

Bidwells have indicated the total funds committed over the past two years will be brought up to £6bn. With the focus of investment in the year in the London market, accounting for up to £1.6bn of total funds committed, the South East and Eastern regions have revealed a further £417m had been invested in the area.

When it comes to the residential market, the annual house price growth rose marginally in April to 0.9% from 0.7% in March, driven by the largest monthly increase in values since November 2018, according to the Build to Rent Summer 2019 analysis.

However, price growth remains weak despite a continued shortage of stock as both buyers and sellers choose to sit out the current political and economic uncertainty. This said, first-time buyer activity continues to rise, assisted by Help to Buy, low mortgage rates and improved affordability.

Across the Oxbridge Growth Corridor, capital values for apartments in city centre locations generally remained stable in 2018. Highly accessible locations with quality city centre environments continue to record premiums. Recent evidence in the analysis underlines the positive impact of an improved town centre offer and the delivery of quality residential stock.

In all locations, values slip back sharply away from the city core, although this discount is particularly marked in Oxford and Cambridge. In the latter city, capital values are around £550 per sqft in the city fringe offering greater Build to Rent opportunities for investors.

With the recently announced introduction of the East West Rail Route, this presents long term opportunities in the Growth Corridor, providing locations along the route easy access to Cambridge, helping to address business concerns concerning the availability and affordability of housing.

Based on the Build to Rent Summer 2019 findings, Colin Summers, partner of capital markets at Bidwells, commented: “Given accelerating demand for globally mobile talent by knowledge-based industries across the Oxbridge Growth Arc, we have seen growing investor demand across the region.

“Higher yield locations such as Bedford, with good access to the region’s universities and science parks, offer opportunities to investors, particularly given forthcoming transport infrastructure improvements.”

You can view the full research here.

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