Student accomodation, build to rent and later living could balloon over the next five years due to demographic shifts, according to new research
The value of the UK’s operational living sectors has the potential to more than double over the next five years if the conditions are right, according to financial services giant BNP Paribas.
The student housing, build to rent, single family rental and senior living sectors are currently worth a combined £190bn based on current demand, but this could balloon to more than £470bn by 2029, the firm’s real estate division has found.
It cautioned that these projected figures would only be achievable if supply shortfalls are addressed, which will be dependent on a number of ‘market force’ factors including supportive planning policies, development viability, data transparency, and improved sector liquidity.
Single family rental would see the biggest increase under the calculations at at least 764%, rising from £6.8bn currently to £59bn in 2029, with senior living forecast to rise by 246%, from £63bn to £219bn.
Student living could also boom by 70% from £58bn to £98bn, and build to rent could expand from £62bn to £97bn, an increase of 56%, the study found.
Rebecca Shafran, alternative markets researcher at BNP Paribas Real Estate said the potential for the four markets to more than double was driven by demographic shifts and urbanisation trends.
“It places an emphasis on the crucial role these sectors can play in addressing the housing crisis and supporting the living needs of the future,” she said, adding that there were “reasons to be bullish with investment allocations”.
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Andrew Screen, head of residential capital markets at BNP Paribas Real Estate said: “We’ve witnessed a significant increase in investors targeting the living sectors over the past six months, and the majority that I’m speaking to are all primed and ready to go and are eagerly awaiting the outcome of the budget.
“We also anticipate large portfolio transactions to be traded over the next 12 months which will be particularly interesting to watch in terms of pricing, yields, and volumes traded.
“In a living sector market with high investor demand and limited development supply, these asset classes provide resilient and strong returns.”
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