UK Build to Rent investment transacts over £1bn in Q1 2019

The UK Build to Rent sector (also known as multifamily housing in parts of Europe and North America) witnessed record levels of investment in the first quarter of 2019, according to the latest residential investment research from CBRE.

CBRE’s UK Residential Investment Marketview of Q1 2019 shows that between January and March 2019, there was a total of £1.04 billion of investment into the UK private rental sector for Build to Rent schemes, including several forward-funding deals and some direct site acquisitions.

This is four times higher than in Q1 2018 and is among the strongest quarterly investment volume recorded since 2015.

The report also highlighted the major deals in Q1 2019 and signified strong momentum for the second quarter, with close to £780 million of deals under offer.

Institutional investment into Build to Rent has translated into over 140,000 homes across the UK which are either completed or in the pipeline, with an increase of 1,981 homes from Q4 2018, according to figures from the British Property Federation.

CBRE’s key yields remain stable, however, with a marginal softening for prime assets in London Zone 2.

Alex Davis, senior director of residential capital markets at CBRE, commented: “Investment into the UK Build to Rent market continues to build real momentum. CBRE recorded a further £1.04bn of institutional investment into the sector in Q1 2019, which was four times higher than Q1 2018, and the strongest start to a year on record.”

He said most of this growth has been driven by international investment, with the large North American funds making their mark in London.

For example, Realstar has forward funded a 161-home scheme in Hackney, while Telford Homes was advised by CBRE in securing £105.5 million of forward funding for their Equipment Works Build to Rent development site in Walthamstow by a joint venture between Henderson Park and Greystar.

Davis continued: “CBRE was involved in the biggest deal of the quarter, advising Canadian institution PSP Investments throughout the formation of a new partnership between Uniball-Rodamco-Westfield and PSP Investments and QuadReal Property Group, known as the Cherry Park Partnership.”

“This partnership will deliver a £670 million private rental scheme adjacent to the Westfield shopping centre in Stratford and feature 1,200 rental homes in an area where we are seeing growing demand from renters.”

Meanwhile, European investors have been much more active across the UK. Legal & General, in particular, has closed on two large forward funding schemes; 324 units in Glasgow and 104 units in Chelmsford. This highlights the growing appetite – particularly amongst UK institutions – to explore ‘new’ markets across the UK’s regional centres and expand their portfolios.