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More Money Wants In To BTR Than London Offices

The Electric Boulevard element of the Battersea Power Station scheme

It could have been so much worse for the UK build-to-rent sector in the first three months of 2021. But thanks to continued faith from investors, it turned out OK.

The UK build-to-rent (multifamily) sector recorded £771M of investment in Q1 2021, despite the confidence-shaking impact of a third English coronavirus lockdown.

CBRE said deals worth a further £1.5B were under offer at 31 March. Growing investor interest in suburban BTR is expected to feature in the remainder of the year.

At first glance, Q1 2021 figures look poor compared to the same period in 2020, showing volumes plunge by 28%. However, analysts at CBRE said that the comparison is not a fair one because Q1 2020 was exceptionally strong: That quarter saw the second highest quarterly investment volume for the sector since 2014.

Standout deals included MGT Investment Management’s £150M forward commitment on a portfolio of units at Battersea Power Station, and an £80M forward-funding for the construction of Moda Living’s build-to-rent scheme in Holland Park, Glasgow

“The strong fundamentals of the sector, particularly the more robust income streams, mean demand remains high and we are anticipating more equity to target UK multifamily assets than central London offices over the course of the year,” CBRE Executive Director for Residential Valuations Jason Hardman said. 

Developers are pressing ahead in expectation of continued investor interest. Quintain Living, the developer behind the Wembley Park scheme, launched 671 more homes in 2020, growing its portfolio by 38% in just one year. Legal & General is growing its suburban build-to-rent offer, building a senior leadership team to claim a stake in a suburban BTR market forecast to grow to £200B.

Legal & General said just 1% of the suburban BTR sector has been supported by institutional capital investment, compared with 6% for the urban market. It called this a “major opportunity.”

L&G has more than 5,000 homes in operation or development across the UK, and it is looking to deliver 1,000 new single family rental homes each year.