Investment in the UK’s built-to-rent sector is set to see a year on year increase, with the US and Canada to invest the highest sums over the coming years.
Build-to-rent investment represents new build properties designed to be let to tenants upon completion. With investment in the Private Rented Sector (PRS) set to reach heights of £83.7 billion in the coming years according to real estate firm Knight Frank, it comes as little surprise that build-to-rent properties are rising in popularity.
Where will investors be targeting?
Locations that are set to perform over the next five years are London and Bristol, not just for the PRS sector but also for senior living and student accommodation. This was calculated using a combination of respondents identifying areas of preference and projects lined up for construction.
The sector is actually predicted to leapfrog student property investment, another area of high investor interest, with predicted investment forecasted to be £75 billion, a surprising £10 billion higher than student property investment.
Investment totals due to rise across the board
The survey also identified the predicted rise in investment across the board in UK property. The PRS market, student accommodation and retirement home investments are all but guaranteed to receive increased investment over the next five years.
35% of the most active respondents are predicted to hold an investment across all three sectors, and 70% are likely to invest in two of the sectors. The PRS market, in particular the buy-to-rent market, is set to outperform the rest of the crop, with student accommodation also likely to continue to be active in the market.
The sectors are receiving more investment as a result of increasing demand. There is an acute shortage of care homes in the UK, students are continually flocking to the UK for a premium education and we are seeing large scale city regeneration in many key areas across the UK, coupled with high levels of employment, increasing spend in the PRS market.
Where else should investors be looking?
On the topic of regeneration, Birmingham in particular is offering great opportunity in the PRS market. Regeneration and infrastructure improvements are leading to more investors targeting the major city.
A case for the capital
London, in contrast to previous reports, is set to perform well over the coming years. Rental growth for student accommodation in the UK capital is set to increase 3.2% year on year, notably greater than the 2.4% predicted across the rest of the region.
In addition, growth of 2.9% and 3.5% respectively in the PRS and Senior living markets, compared to 2.6% and 3.2% across the rest of the UK is promising signs for those investing in the capital.
As with any report, these are mere predictions based on respondents predicted activity. Focus on your long-term investment strategy instead of jumping ship to chase prime locations.
