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CBRE Investment Management’s UK Affordable Housing Fund has chalked up £500M in equity commitments following signings by two more local government pension schemes.
The signings are the latest sign that the UK affordable housing sector is gathering pace as a potential £10B opportunity makes strides in the world of institutional funding.
Tyne and Wear Pension Fund and Scottish Borders Council Pension Fund join seven other local government pension schemes, and 21 other investors, backing the affordable housing vehicle.
The fund is a step toward fulfilling projections of a £10B capital market play in the affordable housing sector.
The venture, one of the first UK unlisted funds to bring institutional client capital into affordable housing, has a pipeline of £400M providing more than 2,000 homes. Schemes delivered so far include the 245-unit Abbey Place in south-east London, a venture delivered by Hub.
“Our fund offers investors the opportunity to access an attractive risk-adjusted return whilst achieving their impact goals,” said Andrew Davey, CBRE Investment Management head of liability aware strategies UK and fund manager.
A British Property Federation report into the potential for private investment co-written with Legal & General Capital argued that a mix of private and public funding can reshape affordable housing.
To increase affordable housing delivery to 145,000 new homes per year, the research found that £34B of additional funding will be required each year, which will need to be made up of £10B of equity from investors, the same from the debt markets and up to £14B from government grant.
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