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Developers Are Still Thinking Big About BTR Despite Inflation And Recession Risks

The Birmingham Smallbrook towers

Build-to-rent developers are still thinking big, despite inflation and recession fears.

Today CEG unveiled plans for no less than 1,800 build-to-rent apartments on the site of the current Smallbrook Queensway office buildings in central Birmingham. The plans exude confidence, embracing a 56-storey block at Wrottesley Street, a 44-storey block at Hurst Street and a 48-storey block next door.

CEG’s no-holds-barred approach echoes new data from CBRE. Research shows that investment in the UK BTR sector grew 11% year-on-year, based on deals from the first half of 2022. The pace of growth accelerated as winter turned to spring.

The H1 transaction total of £1.76B, and a pipeline of deals valued at £2.6B, suggested that last year’s record performance of £4.4B will at least be matched.

As much as 75% of transactions were for assets outside London, as the performance of regional assets continued to mesmerize investors.

The regional focus is even more pronounced in the under-offer pipeline, with 87% of deals under-offer spread across regional markets. 

Single-family rental is also gathering pace: More than £500M of deals under-offer are single-family housing, indicating strong growth for the sector this year.

“The UK build-to-rent sector is showing positive momentum and resilience in the face of headwinds such as cost inflation and interest rate increases," CBRE Head of UK Residential Research Scott Cabot said. "The continued investment into regional markets across the UK is reflective of both investors chasing yield and the ongoing undersupply of stock.”