Subdued Q3 for UK Multifamily sector but strong pipeline points to positive final quarter
The UK Multifamily sector recorded a total of £374m of investment in Q3 2021, according to provisional data from global real estate advisor, CBRE. This represents a 76% decrease on the same period last year, which saw unusually high levels of investment as a result of some significant deals including Phase 2 of Lewisham Gateway and AXA IM’s acquisition of Dolphin Square.
This brings the year-to-date total to £1.92 billion, 28% down on the first nine months of last year. Despite more subdued levels of activity so far this year, the transaction pipeline remains exceptionally strong with £2.9bn of transactions under offer.
Prime Regional Centres accounted for the highest proportion of investment in Q3, representing 48% of the total, with notable transactions including the £73m forward funding of The Castings in Manchester by CDL and Bearing’s acquisition of The Trilogy, Manchester for £53.5m. Legal & General also forward funded Hove Gardens in Hove for £76.5m which will provide 216 homes for rent.
The slowdown in investment activity seen in Q3 reflects the continued restrictions to travel as a result of the pandemic, which have been a particular barrier for international capital. This has been coupled with labour and material shortages, which have delayed transactions. Despite these challenges, investor sentiment remains very strong, we have seen competitive bidding for assets across the board and the occupational market is robust. As such, we are anticipating a strong final quarter of the year.