Investment in the build-to-rent (BTR) sector in the UK has surged to ยฃ640 million in the third quarter of this year, according to a report by Knight Frank. This represents a significant increase from the ยฃ402 million invested in the sector in the second quarter, highlighting the continued appeal of BTR assets to investors. The report also indicates that investment in the BTR sector is on track to exceed ยฃ2 billion by the end of the year, making it a key growth area in the UK property market.
The rise in BTR investment can be attributed to a number of factors, including increased demand for rental housing in the UK and the stability of long-term income streams provided by BTR assets. With home ownership becoming increasingly unaffordable for many people, particularly in major cities like London, demand for rental housing is expected to continue to rise. This, in turn, is driving investor interest in the BTR sector as a way to capitalize on the growing demand for rental properties.
Knight Frank’s report also highlights the resilience of the BTR sector in the face of economic uncertainty. While the ongoing Brexit negotiations and the impact of the COVID-19 pandemic have created challenges for the property market as a whole, the BTR sector has proven to be a safe haven for investors. The report notes that BTR assets have continued to generate strong returns for investors, with yields averaging around 3.5% in the third quarter.
In addition to the increase in investment in the BTR sector, the report also points to a number of key trends shaping the market. One of the most significant trends is the growing popularity of BTR developments in regional cities outside of London. As demand for rental housing spreads beyond the capital, investors are increasingly looking to invest in BTR schemes in cities like Manchester, Birmingham, and Leeds, where rental demand is high and supply is limited.
Another key trend in the BTR sector is the increasing focus on amenities and communal spaces in BTR developments. Tenants are looking for more than just a place to live – they want access to amenities like gyms, co-working spaces, and communal lounges that enhance their living experience. Developers and investors are responding to this demand by incorporating these amenities into their BTR schemes, creating a more attractive offering for tenants.
Looking ahead, Knight Frank predicts that investment in the BTR sector will continue to grow in the coming years as demand for rental housing in the UK remains strong. The firm expects to see further expansion of BTR developments in regional cities, as well as increased investment from institutional investors seeking to capitalize on the sector’s strong returns. With the BTR market showing no signs of slowing down, it is likely to remain a key growth area in the UK property market for the foreseeable future.
