UK Build to Rent Market Update

UK Residential – Q3 2019 UK Build to Rent Market

Update

UK Build to Rent grows by 20% in the last year, exceeding 148,000 homes There are just over 148,000 Build to Rent homes across Figure 1 – Total Build to Rent homes, Q3 2019 the UK, 34,840 of which are now complete, equal to 24%. London continues to lead the way, accounting for 51% of all completed stock, with Manchester the next closest city at 18%.

Across the country, the entire Build to Rent sector has grown by 20% since Q3 2018. In real terms, this amounts to over 25,000 additional Build to Rent homes in the past year.

The average size of schemes has also grown and a completed scheme now averages 133 Build to Rent homes. Of the 262 completed schemes across the UK, 108 fall within the 100 – 250 home category. This area of the market is continuing to grow, with a further 150 schemes within this size band currently in planning or under construction.

The average size of a completed scheme will continue to grow significantly, as the average scheme under construction is now 245 units and those in planning average 325 units.

Eight schemes started construction in the third quarter of 2019, totalling 1,400 units.

Investment remains strong in the core cities of Manchester, Birmingham and Leeds, although opportunities are increasingly being recognised in smaller urban centres with strong fundamentals.

Grainger’s Market Street in Newbury and LaSalle’s Milburngate in Durham are two such examples and are the first Build to Rent developments in each location. Source: Savills, British Property Federation, Molior

Table 1 – Key schemes starting construction in Q3 2019

Scheme Location Investor/Funder PRS Units

Lionel House Birmingham Aberdeen Standard 259

Market Street Newbury Grainger 232

Fabrik, Sweet Street Leeds Grainger 216

Lampwick Manchester Abu Dhabi United Group 213

Berol yard Haringey Long Harbour 174

Milburngate County Durham LaSalle Investment Management 153 Source: Savills, British Property Federation, Molior

Q3 2019 UK Build to Rent Market Update

As institutions have become Figure 2 – Construction pipelines by developer, Q3 2019 more confident in Build to

Rent as a long-term asset the 2,500 number of units being delivered at any one time has 2,250 Developer PRS Units Schemes grown. There are now 35,760 Westfield Europe 2,409 2 units under construction. 2,000 Grainger 2,320 12 Half of the pipeline is 1,750 Legal & General 2,261 8 controlled by just ten Dandara Group 2,061 3 developers, each bringing 1,500 Greystar 2,039 4 forward over 1,200 units. 1,250 Quintain 2,028 6 The remaining half of the Sigma Capital 1,670 19 construction pipeline is split 1,000 Notting Hill Genesis 1,545 8 amongst circa. 60 developers with many operating in their Get Living 1,282 2 750 local markets only. Number ofPRS units Moda Living 1,247 3

Of these developers, 84% are 500 only bringing forward a single 250 scheme though these schemes range from circa. 25 0 to 700 units. Build to Rent Developers Source: Savills, British Property Federation, Molior

In the year to Q3 2019, the Figure 3 – Additions to planning pipeline to boost the sector further number of homes in planning increased by 26% in London Detailed Application Detailed Permission Construction Completion Pre app and 20% in the regions. There 160,000 are now over 77,000 units at various stages along the planning process, with 40,000 140,000 of these in the capital. 120,000 Sigma Capital have ramped up activity this quarter, 100,000 acquiring two sites in East London, their first ventures 80,000 into the capital. This comes after their recent launch in Scotland where, alongside 60,000 Springfield Properties, they are targeting the delivery of 40,000 hundreds of private rented NumberofBuild rent to homes homes across Scotland’s 20,000 major cities. 0 Grainger have also been active this quarter, buying or

funding schemes in Leeds,

Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19

Mar-15 Mar-16 Mar-17 Mar-18 Mar-19

Dec-14 Sep-15 Dec-15 Sep-16 Dec-16 Sep-17 Dec-17 Sep-18 Dec-18 Sep-19 Sheffield and Canning Town. Sep-14 Source: Savills, British Property Federation, Molior

Guy Whittaker Hamish Simmie Contacts Analyst Associate [email protected] [email protected] 0207 299 3031 0207 299 3018

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