Birmingham’s Build to Rent Boom continues

Investment in the UK build to rent residential property sector broke the £2bn barrier for the first time in 2017, new figures from CBRE reveal.

Total capital committed last year hit £2.4bn, representing a 33 per cent year on year increase. The majority of transactions (40 per cent) were recorded in Q4, underpinned by strong regional activity.

Birmingham secured £81m worth of investment during the quarter, with Grainger’s acquisition and forward funding of 156 purpose-built homes at Gilder’s Yard in the Jewellery Quarter and L&G’s funding of Spitfire Bespoke Homes’ 220 apartment Newhall Square scheme further boosting the city’s build to rent stock.

According to CBRE, there are now around 1,900 build to rent units under construction in Birmingham, representing more than £320m of investment.

Tony Haran, director and head of residential investment in the Midlands at CBRE, said:

“Buoyed by a host of major development and infrastructure projects, leading occupier relocations and new company start-ups, particularly within the tech industry, the positivity generated by Birmingham continues to attract investment partners from across the globe. This is evidenced by the growth of the build to rent market, which has steadily gained traction in the city over recent years.

“The anticipated delivery of Birmingham’s first purpose built build to rent units this year will provide much needed, professionally managed, accommodation to the city’s growing population.”

According to CBRE, the substantial growth in investment can be attributed to a considerable increase in volume capital seeking build to rent investment, particularly from US investors who are familiar with the equivalent ‘Multifamily’ model from their domestic market. US and Canadian investment accounted for 41 per cent of total capital in 2017, with UK capital accounting for 46 per cent.

Mr Haran said:

“With more than 19,000 build to rent units now completed in the UK, the initial financial investment is finally starting to translate into a housing alternative that has been well-received by tenants.

“The response of the market, combined with a greater understanding of the build to rent investment offering, has engaged new operators from all over the world, as well as established investors, and we are now seeing more capital deployed into build to rent than ever before.

“Birmingham and, increasingly, cities across the Midlands, continues to be a major beneficiary of investment into the sector, with a significant number of schemes either already coming out of the ground or in the pipeline. It’s an exciting sector to be in.”

Looking ahead, if growth continues at the current rate, with £1.4bn already under offer in the UK, CBRE predicts that annual investment in to the UK build to rent sector could breach £10bn within five years.

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