Built to Rent Investment Volumes Down but Pipeline Remains Healthy

Investment volumes in the UK’s build-to-rent (BTR) sector were down 68% year-on-year in Q3 2023, from just over £1.04bn in Q3 2022 to £323m in Q3 2023, according to provisional data from global real estate advisor, CBRE.

While investment levels in BTR were robust in the first half of the year, exceeding the long-term average, investment also fell by 67% in Q3 from the £986m recorded in Q2 2023.

Despite the relatively low level of activity, CBRE’s data reveals there is presently £2.3bn under offer.

Jason Hardman, Head of Residential Valuations at CBRE UK

We’ve seen subdued levels of transactions over the summer, and there has been a movement in yields, which was inevitable given the current environment of rising interest rates and the cost of debt. However, the sector remains resilient – underpinned by notable supply and demand imbalance and strong rental growth, which we expect to be further fuelled by the current low levels of construction starts.

Pricing discovery is set to continue into Q4 as a number of leased-up assets are expected to come to the market and if interest rates stabilise, it should encourage market activity and transaction levels to rebound.

Jason Hardman, Head of Residential Valuations at CBRE UK