Residential Investment Market
There has been little in the way of obvious change since the Q3 update for the residential investment market.
The heightened furore and uncertainty over Brexit negotiations has understandably continued to cast a shadow over the wider market and for some, this meant that the Christmas and New Year break started much earlier than usual.
We note that the demand for yield and for quantum remains unchanged with the focus remaining mainly outside the M25 and further into the regions, albeit, there are some notable exceptions such as our recent sale of 50 properties in West London to Barnet Council and the sale of Project Merlin comprising 202 assets located in London and the South East to Addington Capital.
Widely publicized research indicates rental growth of 2-3% in some parts of the UK and up to 15% over the next 5 years
This demand remains strong from the regular core investors, ranging from private individuals, established property companies and/or housing associations and local authorities.
It is clear that there is a substantial amount of money available to be deployed into this market subject to finding the right stock at the right price albeit new entrants to the market remain thin on the ground at the current time. Yield remains the primary driver for most investors however there has been a notable shift in interest towards value-add/ asset management opportunities.
The fundamentals surrounding the ownership of residential investment stock have arguably stepped up a level as a defensive play in an increasingly uncertain sales market.
Widely publicized research indicates rental growth of 2-3% in some parts of the UK and up to 15% over the next 5 years so for those that have cash funds available and the management capabilities to hold stock in the medium term, now is as good a time to buy as anytime over the last 5 years, if not better.