Investment in UK build-to-rent sector leaps 85%, says CBRE

Investment in the UK’s build-to-rent sector in the third quarter of this year was 85% higher than in the same period of 2021, according to data from CBRE. 

The real estate advisor’s preliminary research showed £666m was ploughed into built-to-rent (BTR) homes between July and September of 2022. Investment in the BTR sector this year is now £2.84bn, which is an increase of 46% from the same point last year, the CBRE said. 

This comes as regeneration business Peel L&P has revealed it has launched a new suburban BTR company called Letta, with an ambition to deliver 1,000 homes over the next five years. 

Jennet Siebrits, head of UK research at CBRE, believed her firm’s quarter three figures showed the sector’s “resilience in the face of counter-pressures in the wider economy”.  

She said 84% of an under-offer pipeline of nearly £3bn in Q3 – an increase of £0.4bn on Q2 –  was in the regional markets, and £600m of this investment was in single family homes deals. 

But Siebrits also warned that while UK investor interest had remained high until quarter three, she anticipated “the current market backdrop is less conducive to investment, and many [investors] will retain a holding pattern until markets have responded fully to the Bank of England’s intervention following the UK government tax cuts.”  

Siebrits comments come after built-to-rent specialist Watkin Jones predicted yesterday its operating profit would be 10% lower than expected because of “recent market volatility” after the government’s mini-budget. The Bank of England last month started buying government debt to quell turbulence in Britain’s bond markets after prime minister Liz Truss announced tax cutting measures in a ‘mini-budget’. 

CBRE pointed out there were three major quarter 3 deals that had boosted the investment figures: Legal & General’a plans to invest £200m for more than 715 BTR apartments in Central Quay, Cardiff; real estate investor and manager Round Hill Capital’s joint venture with British developer Olympian Homes on a £165m forward-funded scheme in central Manchester for 488 BTR homes; and Watkin Jones’ and German investment manager DWS’ joint venture to deliver 316 BTR homes in Bath under a forward funding deal of around £100m. 

Meanwhile, Peel’s new BTR firm is expected to initially deliver 100 new energy-efficient family homes for market rent in Bolton and Ellesmere Port. Letta’s homes will be built by Peel L&Ps homebuilder Northstone. Liverpool-based property agency Redwing, part of the Regenda Group, will let and manage Letta’s properties. 

Phil Wilson, Peel L&P’s executive director for land, communities and homebuilding, and chief executive of Northstone, said: “We now see the opportunity to offer high quality and well-managed rental accommodation in our suburban neighbourhoods that suit their lifestyle changes and more agile working patterns.”