£20bn boost for Build to Rent market as investors shift focus

£20bn boost for Build to Rent market as investors shift focus

0:01 AM, 16th July 2024, About 4 months ago

Text Size

The UK’s Build to Rent (BtR) sector is set for a £20bn cash injection over the next decade, according to a new report by Savills.

This shift in focus from investors highlights the growing maturity of the market, the real estate firm says.

While £35bn of institutional investment has delivered 100,000 BtR homes in the past decade, Savills warns a further £300bn is needed to meet future demand.

This translates to an additional one million homes in the private rented sector (PRS) by 2031.

‘Just 2% of PRS households’

The firm’s head of national residential investment, Piers de Winton, said: “The BtR market has made significant progress over the last 10 years. Although the sector is emerging as mainstream investment in the UK, it still represents just 2% of private rented sector households.

“When we look at more established markets such as Germany and the USA, where institutions own 41% and 37% of homes respectively, it’s clear that there is significant growth potential of the UK BtR market.”

Investors have funded development

Traditionally, investors have funded development projects, but Savills’ data shows just a fifth of the £20bn invested between 2018 and 2023 went into operational stock.

This trend is expected to reverse, with operational assets accounting for 25% of investment by 2028, rising to 30% by 2033.

The first quarter of 2024 saw the highest proportion of investment ever directed towards operational schemes, with 60% compared to 40% for development.

BtR is now established across 100 local authorities, encompassing all London boroughs.

Savills estimates the combined value of operational assets at £35bn, with £23bn in London and £12bn elsewhere.

The data also shows a record 110,000 BtR homes in the planning pipeline, suggesting faster growth for the sector.


Share This Article


Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Automated Assistant Read More