Build to Rent investment now firmly established in Britain

Britain is seeing record breaking investment into the Build to Rent sector with the total capital committed exceeding £2 billion for the first time in 2017.

In 2017 the amount of investment increased by 22% to reach £2.4 billion with some 41% coming from investors in the United States and Canada, according to the latest residential capital report from real estate consultants CBRE.

Build to Rent land sales also significantly increased during 2017 and there has been a clear shift away from prime to fringe locations, the report also shows, adding that Build to Rent is here to stay and no longer an emerging market.

The substantial growth in investment has been attributed to a considerable increase in volume capital seeking Build to Rent investment, particularly from US investors who are familiar with the equivalent multifamily model from their domestic market.

The majority of transactions, some 40%, were recorded in the final quarter of 2017, underpinned by strong regional activity with 59% of capital deployed in London

Significant deals included Build to Rent operator Grainger agreeing three deals for a total of £86 million in Sheffield, Manchester and Birmingham. Additional investment from L&G meant that Birmingham alone secured £81 million worth in investment during the fourth quarter. One of the landmark London deals of 2017 was CPPIB’s £250 million investment in to Lendlease’s Elephant & Castle project.

‘With over 19,000 Build to Rent units now completed in the UK, financial investment is finally starting to translate into a housing alternative that has been well-received by tenants,’ said Arthur McCalmont, senior director of CBRE UK Development and Residential Capital Markets.

‘The response of the market, combined with a greater understanding of the Build to Rent investment offering, has engaged new operators from all over the world, as well as established investors, and we are now seeing more capital deployed into Build to Rent than ever before,’ he pointed out.

He explained that 2017 saw the emergence of greater investment in to mid-tier specification units, reflecting the sizable demand for this product and taking the sole focus away from the prime end of the market.

‘The additional shift in activity from major cities in to fringe locations demonstrates that Build to Rent is well and truly up and running and should no longer be considered an emerging market,’ he added.