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BTR roundup - record levels of investment, £500m JV and Leeds scheme

Knight Frank has announced that the UK’s Build to Rent (BTR) market received record levels of investment in the first two quarters of 2021.

The global property consultancy recently released new figures which revealed that, in the first half of this year, £2.35 billion of capital was invested into the UK’s BTR sector – with more than £1.27 billion in Q1 and an additional £1.08 billion in Q2.

This represents a 79.8% rise in investment volumes compared with at same point of 2020, which included the first national lockdown.


Last year, more than £3.5 billion of capital was invested, but Knight Frank predicts that 2021 will be a record year, with investment expected to surpass 2020’s total.

The majority of investment in Q2 2021 was the forward-funding new development, with nine such deals completing over the course of the quarter.

“Over the past 18 months, we’ve seen a significant uptick in both appetite from existing investors looking to deploy further capital into the BTR space, as well as a range of new domestic and international investors looking to enter the market,” Nick Pleydell-Bouverie, head of residential capital markets at Knight Frank, said.

“During the Covid-19 pandemic, the rental performance of the sector remained extremely resilient, with average monthly rent collection rates remaining above 96% so far in 2021. Alongside its resilience, what is really driving investor demand is the granularity of the income and scale of the opportunity.”

He added: “In addition to increasing investment into flatted rental schemes and co-living, we have also seen significant growth in demand for rental housing over the past 12 months.

“With existing investors looking to expand their portfolios, and new entrants diversifying from traditional commercial real estate, we will likely see sustained demand that will result in investment reaching new record levels over the next few years.”

Over the course of the first half of 2021, a flurry of high-profile deals took place in the sector, contributing to the record volumes of activity.

Legal & General – one of the pioneers of BTR in the UK and a main player ever since – announced at the beginning of the year that it was funding a major new BTR development in Leeds city centre. The firm, advised by Knight Frank, committed nearly £60 million to partner with Richardson and Ask Real Estate in delivering the 500-unit Tower Works development in the city’s South Bank regeneration area.

Not long after, and again with advice from Knight Frank, another major player in the BTR market – Grainger – acquired a 231-home BTR scheme in Bristol for £63.1 million. Milwrights Place was purchased from Fiera and Cubex Land and represented Bristol’s first purpose-built PRS development.

A few months later, in another major play for Grainger, the Newcastle upon Tyne-based professional landlord bought a £57 million housing development in Newcastle from Moorfield Group. Once more advised by Knight Frank, Grainger’s acquisition of The Forge is set to help deliver 283 rental apartments above ground floor commercial space in the city.

“The sector’s strong regional presence is rapidly growing. Some 70% of funds committed in the first half of 2021 were for schemes outside of London – reflecting investor confidence in the fundamentals which underpin those regional markets, as well as an increase in the number of development opportunities being brought forward outside of the capital,” Oliver Knight, head of residential development research at Knight Frank, said.

“Lifestyle changes, as well as a desire for more space, has been a feature of the rental market over the last 12 months and has directly driven demand.”

Major joint venture for homes across the North and Midlands

Gatehouse Bank has announced the launch of a £500 million joint venture with TPG Real Estate Partners (TREP) to enable construction of up to 2,500 suburban, purpose-built family rental homes across the North and Midlands.

Following the establishment of two large-scale BTR property portfolios, this represents the bank’s latest major venture in this sector, with the joint venture set to become one of the UK’s largest providers of purpose-built, single-family rental homes.

“We are delighted to have found an experienced, institutional partner in TREP as we launch our third major private rental investment initiative,” Paul Stockwell, Gatehouse Bank’s chief commercial officer, said.

“This joint venture will see significant capital being deployed to build and develop the next generation of build-to-rent housing, concentrating on high-quality family homes in suburban locations.”

The JV has already secured an initial seed portfolio of four sites, purchased in partnership with leading housebuilder Countryside Properties. The launch properties comprise of 321 single-family homes, situated in established residential communities in the Midlands, Greater Manchester and Merseyside regions of the UK. The partnership arrangements intend to deliver additional projects in the Midlands and North in the near future.

With ‘significant equity’, the JV says it will seek to strengthen existing partnerships, as well as developing new relationships with other leading housebuilders across the UK to forward-fund developments of ‘new, high-quality rental homes for families’ - which will ultimately expand the portfolio to its target of 2,500 houses.

“We are pleased to be partnering in this joint venture with Gatehouse, a skilled operator in the UK’s build-to-rent market,” James Piper, partner at TREP, the real estate equity investment platform of global alternative asset firm TPG, said:

“TREP has a strong track record of developing and owning high-quality private rental assets in North America and we are excited to leverage this expertise to achieve similar success in the UK, where there is strong and growing demand for new-build rental homes. With this initiative, we aim to be a valued partner not only to homebuilders but also the communities and families that will call these properties home.”

This is the third such venture for Gatehouse, with the bank achieving a ‘ground-breaking sale’ of its first portfolio, Thistle, in January to an institutional investor for a total consideration of around £150 million.

The deal, believed to be the largest transaction of its nature in the UK to date, was made up of a portfolio of 918 houses across 15 sites, principally two-and-three-bedroom homes across North-West England.

New scheme in Leeds

Continuing with Grainger and Leeds, the firm recently launched its latest city centre development on the historic site of the former Yorkshire Post building.

The new £40 million BTR scheme based in Leeds city centre has now opened up to residents. The Headline is the latest project from Grainger, it’s first Build-to-Rent development in Leeds, and is ready for occupation this August.

The ‘stylish complex’, overlooking the River Aire, includes 242 new homes and comes with a range of amenities and professional on-site management services.

The development also includes a 24-hour gym, high-speed WiFi, wellness studio and private dining room. In addition, residents will have access to a dedicated onsite Resident Services team and handyman service. 

The scheme, which has over 5,300 ft of shared social space, is also aiming to provide many opportunities for residents to interact, ranging from a sky lounge with wrap-around balcony offering ‘amazing views’ of the city to a co-working space, residents’ lounge and games room.

Grainger says the one and two-bed apartments come with a range of furniture options, storage and modern integrated appliances. Monthly rents begin from £905, with flexible tenancy options of up to three years available, ‘offering a sense of long-term security for residents’.

The Headline sits just a ten-minute walk from Leeds station, coffee shops, bars and restaurants.

The development is the latest addition to Grainger’s regional BTR portfolio, which includes two recent launches - The Filaments (Salford) and Gatehouse Apartments (Southampton) - as well as more established developments such as Brook Place (Sheffield), Solstice Apartments (Milton Keynes), Hawkins & George (Bristol) and Clippers Quay (Manchester), with the latter being one of the UK’s largest rental developments outside of London.

“We are delighted to be launching our first build-to-rent scheme in Leeds, adding to our growing regional portfolio of high-quality homes. Our approach is to design with the resident top of mind, from the building itself to the amenities and services available, creating an enjoyable, hassle-free way of renting,” Helen Gordon, chief executive at Grainger, commented.

“Instilling a sense of community is key for Grainger and we hope that The Headline will not only provide stylish living for our residents, but support wellbeing, social interaction and integration with the local community.”


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