UK: Data from BNP Paribas Real Estate has revealed that investment into UK BTR in Q1 2023 exceeded £1.1 billion.
The analysis shows that the sector recorded total investment of £4.3 billion in 2022, a record for the fourth consecutive year.
Rebecca Shafran, senior associate director, alternative markets research, at BNP Paribas Real Estate, said: “Whilst other sectors have noted a more obvious slowdown in investment activity, the Build to Rent sector has recorded a significant uptick of recent, particularly across both regional cities and in new territories such as single-family housing. Investors paused for breath after the turbulence as a result of Liz Truss’s leadership and the worsening economic conditions, but we can see resilience and strong rental growth has resulted in a strong start to the year, in line with comparative quarters where economic conditions were more positive.”
BNP Paribas Real Estate estimates that up to 80 per cent of Q1 investment activity was outside of London – around major regional cities such as Manchester and Birmingham, and into single-family housing in suburban areas. It is also seeing an increased appetite for London and London commuter belt development opportunities, as new investors seek out lower risk locations.
“Investment interest and allocation of capital remains strong across the entire living sector, led by Build to Rent, student accommodation and single-family housing. New investors have also entered the market in the last 12 months with a lower cost of capital, increasing demand for investment opportunities and we anticipate a stark increase in transactions towards the end of the year, particularly across London, commuter belt and key regional cities. However, as it stands, higher interest rates are impacting investor levered returns, resulting in a shift of some investors towards higher yielding or value-add living sector investments,” said Andrew Screen, head of residential capital markets at BNP Paribas Real Estate.
Notable deals in Q1 2023 included the PGIM purchase of the Goldman Sachs portfolio for single-family homes in Manchester and Liverpool for £190 million, the Harrison Street, NFU Mutual and Apache forward funding on Moda’s Great Charles Street for £302 million, and Realstar’s £108m forward funding deal for Phase 2 of UNCLE Leeds.
