Build to Rent sees £800 million investment surge

Build to Rent sees £800 million investment surge

0:02 AM, 31st October 2024, About 12 hours ago

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The Build to Rent sector has attracted a staggering £800 million in investment during the third quarter of 2024.

Savills says the surge in investment is being fuelled by both bulk and single site transactions, as investors aim to establish essential operational infrastructure.

Bulk deal investments reached £1.2 billion in the year leading up to Q3 2024, accounting for half of the total £2.4 billion invested in the single-family home (SFH) sector.

Meanwhile, single-site schemes also experienced significant growth, increasing from £0.27 billion to £1.2 billion.

Viability remains a hurdle

Guy Whittaker, head of UK BTR research at Savills, said: “The rapid growth of single site transactions alongside bulk deals shows that the recent rise in investment is a longer-term trend, rather than just a reaction to a softer sales market.

“Viability remains a hurdle in the current climate, with elevated debt and construction costs, as does the planning system, particularly in London.

“If these obstacles can be navigated, there is no shortage of investor demand to deliver new homes for rent, with more and more investors reallocating capital from other commercial real estate sectors into living.”

Construction pipeline has shrunk

Savills reports that sales to homeowners and buy-to-let investors are slowing down, and institutions are jumping at the chance to enter the market.

House builders are changing their business models and teaming up with the private rented sector (PRS) to show their long-term commitment to single-family homes (SFH).

This shift comes as sales rates, once supported by the Help to Buy scheme, may not return to previous levels.

The construction pipeline has shrunk by 20% in the last year, and there are signs of contraction in the wider private rented sector. Savills points out that Build to Rent (BTR) investment is key to replacing lost rental supply with high-quality, efficient homes.


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