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When does a solid performance begin to feel like a letdown?
The answer is: In the awkward period between investors saying they will do something, and them actually doing it.
In the last month Apache, Macquarie, Land Securities, British Land and John Lewis have become the latest to join the UK build-to-rent pile-on, yet the UK Build-To-Rent sector transacted only about £1.5B worth of deals in H1 2021. It’s a ho-hum kind of result.
The figure, from CBRE, is up 30% on the same period last year. But then H1 2020 was the first and most severe of the UK’s Covid-19 lockdowns.
A further £1.9B worth of deals are currently under offer, CBRE said. The firm said this is up from the £1.4B under offer in Q1 2021 reflecting a 26% increase.
Again, Q1 2021 was a period of lockdown, so the comparison may not be fair.
The deals-under-offer figure is also more complicated than it looks. Around £1.6B was said to be under offer in Q4 2020, suggesting a market oscillating around a fairly stable core of investor demand.
The UK BTR sector scored a record-breaking £3.5B of investment deals in 2020. The second half will have to achieve all, and more, of the £1.9B deals in the pipeline if it is to beat that record.
The data points to a market in a steady holding pattern as it braces for a surge of new development activity, rather than a market in the grip of an upward-only boom.
CBRE said the data is “demonstrating a very healthy pipeline.”
Key deals in Q2 2021 included Grainger’s acquisition of The Forge BTR scheme in Newcastle and an asset in Derby on a forward funding basis, as well as Heimstaden’s £160M debut in the UK BTR sector, with the funding of Soho Wharf in Birmingham.
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