UK Build-to-Rent investment sees strong start to 2022
The UK Build-to-Rent sector recorded a total of £650m of investment in Q1 2022, according to preliminary data from global real estate advisor CBRE.
Following a record-breaking year of £4.1bn of investment in 2021, the sector continues to display resilience with a significant amount of capital targeting the sector, even in the face of continued construction cost inflation.
An estimated 75% of the capital in Q1 2022 was deployed across London and the South, representing a shift compared to Q4 2021 when capital was deployed more evenly across the UK. The increasing spread of Build-to-Rent into new towns and cities has also continued. Both themes are amply illustrated by new entrants Oaktree & CompassRock’s deal with Crest Nicholson to provide more than 400 Build-to-Rent homes in Walton-on-Thames, Southampton and Farnham.
Other notable deals this quarter include a flurry of activity in London; Picet and Pinnacle agreed the £50m forward funding of Pontoon Reach, and Realstar finalised the £120m forward funding of Deptford Landings.
This positive momentum is expected to continue throughout the year, with provisional data showing almost £2bn of deals currently under offer, continuing the downward pressure on prime yields.
We estimate investment volumes totalled around £650m in Q1, which is well above the quarterly average since 2015, and illustrates the resilience of this asset class. Demand from occupiers is strong, and growing, with a return to city centre living particularly evident in tandem with a widespread return to the office. With a further £2.1bn of deals under offer, we expect the market momentum to grow over the year.