Investment in build-to-rent is on course to break last year’s record, after £2.4bn in finance backed 11,596 homes over the first half of 2021.
According to EG Radius, investors provided £739m to the sector in Q2, with 15 deals providing finance for 4,690 homes.
This is a threefold increase on investment during the same period in 2020, although a drop on the Q1 total of £1.7bn.
The H1 total of £2.4bn compares with just £1.1bn in the first six months of last year (backing 5,279 homes), putting the sector on track to eclipse 2020’s £3.9bn total.
The biggest deal in Q2 was Swedish investor Heimstaden Bostad’s £160m forward funding of Galliard Homes and Apsley House Capital’s Soho Wharf in Birmingham (pictured). The 752-home scheme includes a combination of flats and townhouses spanning a 12-acre site to the north-west of the city centre. The deal was the first for Heimstaden Bostad in the UK, building on a £15bn portfolio of more than 114,000 homes in continental Europe.
Other new entrants included Northwood Investors, which provided £75m in equity for Platform_’s 1,039-home regional portfolio in Sheffield, Glasgow and Cardiff, and Catella APAM’s £32m Leicester buy from developer Watkin Jones.
Some 76% of funds committed were outside the capital, with Birmingham attracting the most investment at £200m, closely followed by London at £174m.
The bulk of the deals were forward funding, but a handful of development site sales will see numbers further boosted as buyers seek to rework plans. In Battersea, Greystar aims to lift current plans for Big Yellow’s York Road Business Centre from 168 flats to around 500. And in Leeds, Platform_’s 8-acre former Burberry site has capacity for around 800 homes.
Over the past 12 months investors have committed more than £5.1bn, funding some 20,000 new homes.
The Q2 investment totals do not include Legal & General’s £350m commitment to Bristol Temple Island, which will feature 550 flats, including 200 affordable homes, as the investor has yet to confirm the tenure of private homes. L&G has already committed £310m to nearby BTR. The investor will now launch the first phase of its public consultation on the plans for Temple Island.
Elsewhere, Moda Living and London Square have been advancing plans for BTR at the Royal Mail site in Nine Elms, SW8, after exchanging contracts on the £100m acquisition earlier this year.
During the quarter, Renewal lodged plans for 3,500 homes at the £2bn New Bermondsey regeneration next to Millwall Football Club, SE15, with 400 BTR homes to come forward in the first phase. Canary Wharf Group is also expected to lodge plans for a 60-storey BTR scheme at 1 Park Place, E14, which would be the tallest in the UK.
A number of new ventures from household names Macquarie, Lloyds and John Lewis all promise to further bolster the pipeline.
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Image © Claridge Architects
