Bristol – will it be the next Build to Rent hub?

The city of Bristol has become one of the most popular places outside of London for tenants to live in recent years, thanks to its green vision, bohemian vibe and appeal to students and young professionals.

And now new research from BNP Paribas Real Estate (BNPPRE) has suggested that the city and its surrounding areas make a compelling case for Build to Rent (BTR) investors, with a number of schemes already underway in the city, which has recently been receiving the limelight in Stephen Merchant’s BBC comedy-drama Outlaws.

The firm’s analysis found that there are around 800 completed BTR units in the city with approximately 2,000 more in the pipeline, most of which are anticipated to complete by 2024.

In its BTR Q3 insight, the company revealed that Bristol’s status as one of England’s most populous cities, home to two universities, make it an ideal location for new schemes. As well as a rich (and sometimes highly controversial history), it also has strong transport links to London and its own airport.

What’s more, the city is home to a number of industry clusters including in the creative and digital spheres, as well as a strong FinTech sector. Lots of television shows are filmed or made in the city, while it also has a strong professional and financial services presence, too.

Bristol’s demographics support the growth of BTR in the city, with the population of Bristol set to increase by 5.9% over the next ten years (in comparison to 4.2% across the whole of England). The 25-44 years cohort – often labelled under the bracket of millennials and Generation Z – is also expected to grow well above the national average at 6.1%, compared to -1.3% in England, over the same period. This demographic, more than any other, is most likely to inhabit BTR developments.

The city is also home to a higher-than-average proportion (20.8%) of households in the private rented sector, with home ownership below the national average, at 58.8%.

Home ownership levels have been affected by housing affordability in Bristol, with average house prices, currently sitting at £280,000, above the national average. Similarly, the ratio of house prices to earnings in Bristol is also greater than the average for England, at 8.59, according to the Office for National Statistics.

“Bristol has a wonderful sense of identity, one of the key factors that makes it such an attractive place to both live and work. The city and surrounding areas are one of the UK’s cultural and innovation hotspots, and this is translating into an increasingly attractive BTR proposition,” Joshua Gunn, head of BNP Paribas’ Bristol office, said.

“Industries are thriving, the population in booming at a rate above the UK average, and wages are highly competitive. Even the pipeline of BTR will not be sufficient to satiate the thirst of market demand where more than a fifth of households rent. All signs point to Bristol as the city that should be top of investor’s watchlist for opportunities going into 2022.”

Rebecca Shafran, alternative markets research associate director at BNP Paribas, added: “The rise in the Build to Rent sector outside of London continues to be in the spotlight for investors who are keen to identify new opportunities in and around regional cities. Bristol certainly makes an interesting proposition for those investors, where the fundamentals of strong demand and short supply are underpinning sector growth.”

She went on: “The city also benefits from its reputation as vibrant, aspirational, and with a fierce sense of community. Post-pandemic, people are reassessing their priorities and the ability of Bristol to deliver on career ambitions and work/life balance is huge upside factor.”