CBRE reports investment levels into the UK’s purpose-built rental sector are at record highs, with more investors targeting key regional markets.

Summary:

• Investment into the UK’s build-to-rent property sector hit a new all-time high in the third quarter of 2020
• Newly released figures by CBRE show that total transaction values in the purpose-built rental market hit £1.43 billion between July and September
• There was also a noticeable trend in buyers “specifically targeting the regional markets”, as more investors are attracted to a sector regarded by many as Britain’s modern rental solution

Has 2020 further energised the growing investment demand for UK build-to-rent property?

As buy-to-let, long regarded as the go-to option for rental homes in Britain, continues to look increasingly outdated for today’s modern tenants, purpose-built rental property is viewed as the natural evolution for both tenants and investors.

And newly released figures from CBRE reveal record levels of investment into the build-to-rent sector in 2020.

As reported by Property Industry Eye, £1.43 billion was transacted in build-to-rent property in the UK between July and September, the highest quarterly spending on record.

CBRE believe that the real figure for the quarter could be even higher, with a further £1.4 billion worth of deals still under offer as the month of September ended.

For many investors, the global pandemic has prompted a renewed focus on securing strong, resilient investments for the long-term. This is likely to be one of the key drivers of this investment in UK build-to-rent property. CBRE estimate that, by the end of 2020, as much as £4 billion may have been invested in the sector, an increase of 50% over 2019 levels.

“Over the last few months, we have seen a number of high-profile deals across the key regional centres which further underpin the robust nature of the market,” said Adam Burr, Head of CBRE’s Residential Valuation Team in Manchester.

The typical features of build-to-rent developments – modern living spaces, luxury amenities and central locations – are incredibly desirable to the UK’s rising number of lifestyle renters; those that actively choose to rent their homes. Management and maintenance by professional on-site teams further their appeal among tenants.

With millions of renters in the UK spending more time at home in 2020, the demand for better rental accommodation has only increased the desirability of build-to-rent properties further.

Crucially, with both demand from tenants and returns for investors strongest in key, undersupplied regional cities such as Manchester and Birmingham, CBRE has also noticed a trend of buyers specifically targeted regional UK cities outside of London.

Burr added: “With the emergence of some new investors, some specifically targeting the regional markets, there appears to be a very optimistic outlook in the regional multifamily/single family space.”