UK BTR: You Have To Know These 3 Staggering Facts
CBRE has dug deep into the UK rented residential housing market in 2020, and it has concluded it was a record-breaker. The research shows that, despite the obvious hurdles posed by a global pandemic, the build-to-rent sector turned in a powerful performance.
These are the three key numbers that show how rapidly the sector is maturing and how resilient it has become.
1. Investment Rose To £3.5B
A strong fourth quarter took total 2020 investment in the UK multifamily sector to £3.5B. Investment levels were up 30% on 2019 and 15% up on the previous record in 2018, in a year when performance might have been blunted by the coronavirus pandemic.
Deals that completed in Q4 2020 included the sale of Realstar’s £570M portfolio of multifamily and student housing as well as Realstar and Quadreal’s £100M joint venture forward-funding of Wembley Link with HUB and Bridges Fund Management. Outside of London, Long Harbour agreed the sale of its Skyline II scheme in Manchester to L1 Capital for £27.3M.
2. BTR Tenants Pay Their Rent
The BTR idea was based on the assumption that if you treat the tenants right, they will treat you right. The evidence suggests this cycle of virtue is a valuable asset in tough times. Whilst office and industrial landlords managed to collect around 80% of their rents, and retail landlords did well to collect 50%, according to the CBRE report, in Q4 2020 average rent collection rates were estimated to be at 97% with occupancy levels increasing to 88%.
3. Investors Have Another £1.6B Deals In The Pipeline
This positive momentum is expected to continue in 2021 with £1.6B of deals under offer at the end of 2020. London accounts for 51% of this pipeline with £810M worth of deals under offer. The remainder is spread across the regional markets, including Bristol, Glasgow, Leeds, Manchester, Newcastle and Sheffield. CBRE expects to see a significant increase in deal-flow with approximately £7B of trades per annum by the end of 2025.