The Build to Rent Market
Overview
The UK Build to Rent (BTR) sector continues to see an uptick in transactional activity, despite continued challenges across the development and investment climate. Following a subdued summer across the sector, September began with a notable increase in activity in the BTR market.
The Build to Rent Market
Overview
The UK Build to Rent (BTR) sector continues to see an uptick in transactional activity, despite continued challenges across the development and investment climate. Following a subdued summer across the sector, September began with a notable increase in activity in the BTR market.
This activity is a further display of confidence in the resilience of the BTR market, even in the face of broader economic uncertainties. The current development investment landscape continues to be characterised by a proactive approach from investors and developers to find an investment solution for development opportunities in a challenging environment. This is supplemented with an increasing but overall, a modest, number of operational assets coming to the market, particularly first-generation schemes.
Viability for development, particularly in multi-family (MF) remains difficult in a sector that, although showing some maturity, is still very much in the development stage.
Who is Active / Headline Deals
Notable transactions in H1/25 include Goodstone Living agreeing a £116M partnership with the JV between Hill Group & Peabody to deliver 360 BTR MF units at Dagenham Green. The JV between Ridgeback Group and AimCo has purchased the 257-unit Equipment Works in London from Greystar and Henderson Park for £126M. Barings has agreed a £152M deal with Glenbrook to delivery 618 apartment scheme in Leeds. KKR have purchased the stabilised Slate Yard in Manchester from L&G for ~£100M. A JV between L&G, PGGM and Nest has agreed to forward fund F1 in Manchester, a 494 unit MF scheme being delivered by Renaker.
Kennedy Wilson exchanged on the purchase of more than 650 homes with three separate housebuilders across seven sites, totalling £213M. Place First acquiring 550 single family homes from Blackstone and Long Harbour agreeing their first single family purchase in Essex from Vistry.
Direction of Travel
We continue to expect investors prioritising progressed, best quality multi-family assets with strong, experienced development partners. The recent Building Safety Regulations are causing further challenges to MF development, increasing programme length and costs.
Yields will be robust for best-in-class schemes, with secondary locations more challenging due to viability constraints. As inflation continues to stabilise and order books reduce, contractor pricing should be more conducive for development. We expect a higher number of start of sites this year than 2024.
Single Family has seen a number of high profile entrants in the past six months and we are seeing further capital looking to enter the space. We therefore expect an continuation of the strong demand in the sector.