Impressive Growth in UK Build-to-Rent Investment, But Total Falls Short of Forecasts
The UK Build-to-Rent (BTR) sector has seen remarkable growth in recent years, with significant investments pouring in from both domestic and international sources. However, despite this impressive growth, the total investment in the sector has fallen short of initial forecasts.
According to a recent report by real estate services firm CBRE, the total investment in UK BTR reached £2.4 billion in 2019, a 33% increase from the previous year. This is a clear indication of the sector’s potential and attractiveness to investors. However, this figure falls short of the initial forecast of £4 billion, highlighting a missed opportunity for the BTR market.
The BTR sector has gained significant momentum in the UK in the past few years, driven by a combination of factors such as the growing demand for rental housing, changing demographics, and a shift towards more flexible and affordable living options. This has led to a surge in the development of purpose-built rental properties, with major cities like London, Manchester, and Birmingham leading the way.
One of the main drivers of BTR investment in the UK has been the growing interest from institutional investors, who see the sector as a stable and long-term investment opportunity. In 2019, institutional investors accounted for 55% of the total BTR investment, with the remaining 45% coming from private equity and other sources.
The BTR sector has also attracted significant interest from international investors, with the US, Canada, and Germany being the top three countries investing in UK BTR. This is a testament to the global appeal and potential of the sector, as well as the UK’s reputation as a safe and stable market for real estate investments.
One of the key factors contributing to the growth of BTR investment in the UK is the government’s support for the sector. The introduction of the Build-to-Rent Fund in 2012 and the Private Rented Sector (PRS) Taskforce in 2013 have provided a much-needed boost to the sector, encouraging developers and investors to explore the potential of BTR in the UK.
The BTR sector also offers a range of benefits for both investors and tenants. For investors, it provides a stable and long-term income stream, with the potential for capital appreciation. On the other hand, tenants benefit from high-quality, professionally managed rental properties that offer a range of amenities and services, making it an attractive alternative to traditional buy-to-let properties.
Despite the impressive growth and potential of the BTR sector, the total investment in 2019 fell short of initial forecasts. This can be attributed to various factors, including the uncertainty surrounding Brexit and the general election, which may have caused some investors to adopt a more cautious approach.
However, industry experts remain optimistic about the future of BTR investment in the UK. The CBRE report predicts that the total investment in BTR is expected to reach £4 billion in 2020, matching the initial forecast for 2019. This indicates that the sector is still on track for significant growth and presents a lucrative opportunity for investors.
Moreover, the government’s commitment to supporting the BTR sector remains strong, with the recent announcement of a £1 billion fund to support the development of new rental homes. This is a clear indication of the government’s recognition of the importance of BTR in meeting the growing demand for rental housing in the UK.
In conclusion, while the total investment in UK BTR may have fallen short of initial forecasts, the sector’s growth and potential cannot be ignored. With the government’s support, increasing interest from institutional and international investors, and a growing demand for rental housing, the BTR sector is set to continue its impressive growth in the UK. Investors looking for a stable and long-term investment opportunity should keep a close eye on the BTR market, as it presents a promising opportunity for both financial returns and social impact.