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Where will the future demand for BTR outside London be at its strongest?

New research by global real estate firm CBRE has identified the UK towns and cities outside London where the future demand for rental accommodation will be strongest.

The findings identified the towns and cities outside the capital that are likely to have strong future demand for privately rented homes. This, in turn, could inform Build to Rent (BTR) investors making funding decisions, as well as supporting developers, housebuilders and landowners in making the case for investors moving into new locations.

CBRE says it’s the first time this particular set of metrics have been analysed in this way. The metrics were: three determinants of the size of the PRS – population of 25-34-year-olds, student population and economy – applied to future projections.


These were combined with three extra metrics – the CBRE Creative Cities Index, employment growth and BTR development pipeline. This resulted in the list of the 20 top towns/cities for rental demand (although the model could be applied to any local authority across the UK).

Where in the UK is Build to Rent set to take off?

As well as identifying the UK towns and cities outside London where the demand for rental accommodation will be strongest over the next decade, the research also looked at where the rapidly expanding Build to Rent sector could grow substantially.

The percentage of households living in the PRS in the UK has risen from 13% to 20% over the past ten years, according to ONS data. Meanwhile, the percentage of owner occupiers has declined, meaning that more accommodation is needed to meet the demand for homes to rent.

Over the past five years, CBRE has tracked more than £10 billion in investment into the UK’s BTR sector. The latest figures from the British Property Federation and Savills indicate that investment into the sector has helped deliver over 40,000 BTR homes – which are properties designed specifically for renters, owned and operated by a professional landlord.

There are a further 110,000 BTR homes under construction or in the planning stages. BTR developments typically have an on-site manager and offer various other amenities and services for tenants, including communal areas, co-working spaces, gyms, cinemas, swimming pools, free WiFi and managed gardens.

Approximately half of all BTR homes are in London, but with regional towns and cities also attracting substantial investment – especially in the North West and the West Midlands - this balance could soon change, with a range of locations set to benefit from the BTR boom as its popularity continues to soar.

CBRE has identified the 20 towns and cities across the UK that will potentially see the highest demand for private rented accommodation over the next decade, and, as a result, where there is likely to also be the most demand for BTR developments.

You can see the list in the table below.

CBRE Future Rental Hotspots






















Source: CBRE Research. Locations are listed alphabetically, not ranked

CBRE built a statistical model to analyse the demand drivers for the PRS across all local authorities in the UK, with the analysis highlighting three main factors influencing greater demand for rental accommodation, namely: locations with a higher percentage of the population aged 25 to 34, high numbers of students, and the relative size of the economy. These three factors, CBRE said, have a quantifiable impact on the size of the PRS in each town or city.

These findings were then applied to forecasts for each metric to quantify the potential change over the next ten years. To further support the research, CBRE combined the results with three additional metrics, based on CBRE’s Creative Cities Index, projected employment growth, and the current number of BTR developments in the pipeline.

“We excluded London from this analysis as we know there is already a substantial private rented sector and strong demand in the city, combined with a strong multifamily (BTR) development pipeline,” Scott Cabot, associate director of research at CBRE, said.

“Instead, we focused on markets across the wider UK, looking at metrics for current demand, along with forecasts. This enabled us to identify the locations with the highest future demand, which could also attract significant multifamily (BTR) investment.

He added: “What is clear from our results is that there is a good geographical spread of potential future multifamily (BTR) hotspots. These include cities with large PRS, like Birmingham and Manchester in England, and Glasgow and Edinburgh in Scotland. We also identified cities with large student populations like Nottingham, Belfast, Bristol and Coventry. People may decide to live in these cities after completing their studies, perhaps working in the growing tech and creative sectors, and will need a home to rent.”

Where will the future demand for BTR outside London be at its strongest?

Cabot said CBRE’s research had also identified cities where there is currently no BTR development pipeline, but where indicators show there will be good levels of demand. “For instance, Brighton, with its two universities, is one of CBRE’s top 10 creative cities, meaning it will attract future employers, and that there are healthy employment and economic growth forecasts underpinning the rental market.”

Peter Burns, head of UK Development and Residential Capital Markets at CBRE, said BTR investment over the last five years had been evenly split between London and main regional cities, and with the sector’s current growth trajectory he expects further geographical diversification.

“Domestic investors have already made significant deals in regional cities, and as these destinations become more established, and more developments are operational and showing good returns, international investors are following suit,” he said.

“London has led the multifamily (BTR) revolution so far, and we expect continued strong performance in the capital. New market entrants see the relative value of the UK versus other European centres, but they need to familiarise themselves with all the markets across the UK.”

What next for Build to Rent?

After total investment of £2.4 billion into UK Build to Rent in 2019, the outlook for 2020 is looking favourable. There is £1.5 billion worth of deals currently under offer, illustrating the continued high demand for the sector.

CBRE forecasts that total residential investment will increase by approximately 30% in 2020, with demand being driven by an increasingly diverse investor base from both domestic and overseas institutions.

Furthermore, the firm says a subdued sales market is set to persist in 2020, meaning BTR will be the preferred disposal route for many developers.

CBRE says that UK BTR as a sector is still in the development phase, with the bulk of transactions for forward-funding (as opposed to trading operational assets or portfolios).

With about half of the pipeline found in London, and the sector continuing on an upward curve, CBRE says the share of investment outside the capital is starting to change, and the pipeline is likely to follow.

You can read the full report here: UK Multifamily: Which towns and cities will see the strongest demand for rental accommodation in the future?


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