Birmingham will be the top-performing city for private rented sector residential development over the next five years.

So says survey data compiled by Knight Frank, seeking to identify locations which would outperform over the next five years.

Investment will be led by funders from the USA, Canada and the UK, Knight Frank predicted.

London and Bristol emerge as key opportunity areas in rented residential, elderly care and student housing. But Birmingham is the best opportunity for PRS by quite some margin, according to respondents, driven by regeneration and infrastructure improvements.

When asked about future rental growth, respondents expect annual rental growth in London student accommodation to be 3.2%, and 2.4% in the regions over the next five years.

Investors in the PRS sector also expect average annual rental growth in London  (2.9%) to be stronger than that of the regions (2.6%) over the same period.

Senior living rental growth is expected to be stronger again, at 3.5% in London and 3.2% in the regions, according to respondents.

Investment into the UK student accommodation, investment-grade private rented sector and senior living rental sectors is expected to reach £146B by 2025, rising from £87.3B in 2019, according to Knight Frank’s latest research.

The data comes from Knight Frank’s inaugural residential investment report, which looks at the sector as a whole for the first time. The survey suggests that over the next five years the PRS sector is set to leapfrog student accommodation, in terms of size, with the £75B capital invested and committed in the investment-grade private rented sector more than the £65B predicted for the student accommodation sector.

Knight Frank surveyed 43 leading investors, with a combined £32B already invested across student accommodation, PRS and senior living.

“The growth of these sectors is mainly down to investor appetite for diversification, the granularity of occupiers that comes with individual units, demographic and tenure shifts and a housing policy landscape in the UK that is now embracing diversity of tenure,” Knight Frank Joint Head of Residential Development & Investment James Mannix said.