Investment into UK’s BTR sector topped £4bn in 2021

New research from Knight Frank reveals that the UK Build to Rent sector topped £4bn in 2021 – and continues to rise.

Octagon Build to Rent building, Birmingham - CDL | Knight Frank | BTR News
Octagon Build to Rent building, Birmingham.

Institutional investment volumes into the UK Build to Rent sector continue to rise. According to new research by global property consultancy Knight Frank, over £1.4bn worth of deals were agreed in the final three months of 2021, pushing year-end investment volumes to a record £4.3bn.

Annual spend was up 19% on 2020, which was the previous record year. Deal volumes were also up by nearly a third year-on-year.

Notable deals in Q4 included Singaporean developer CDL’s £103m forward fund of the Octagon in Birmingham, Grainger’s £141m forward fund of Merrick Place from Network Homes in Ealing, and L&G forward fund of the Bargate Quarter in Southampton. Further funding deals occurred in Manchester, Edinburgh and Leeds – highlighting sustained investor appetite for the UK’s largest cities. In total, in 2021, 76% of deals struck were for Build to Rent schemes outside of London.

“Existing investors were particularly active in 2021. However, the pool of investors looking to access the market is deepening. Around 23% of deals agreed in 2021 were from new entrants, a move which has intensified competition to either create or acquire stock.”

Oliver Knight, Head of Residential Development Research, Knight Frank
UK BTR investment volumes - Knight Frank | BTR News

Rising investment volumes are also supporting Build to Rent delivery. According to Knight Frank, the UK’s Build to Rent stock now stands at around 60,000 completed homes – with a further 170,000 either under construction, with planning granted, or in pre-planning. This brings the total pipeline to a possible 230,000 Build to Rent homes due to be delivered in the coming years.

Cumulative UK BTR supply - Knight Frank | BTR News

Build to Rent still forms a small part of the overall rental market – despite the rapid growth of the sector in recent years. Completed stock accounts for 1.3% of all private rental households, rising to 2.2% if the pipeline of under construction stock is included. Even in the most mature markets the figures suggest there is still capacity for growth.

“The growth of Build to Rent, across both multi-and single-family housing, will continue to be a central feature of the real estate market in 2022, with a significant pipeline of deals already expected to exchange in the first quarter. The fundamentals that have driven investor interest remain in place. This includes a growing and undersupplied rental market, as individual buy-to-let landlords continue to rationalise portfolios, as well as Build to Rent’s proven income streams with defensive counter-cyclical qualities.”

Nick Pleydell-Bouverie, Head of Residential Investment, Knight Frank
Complete and under construction Build to Rent as % of PRS households - Knight Frank | BTR News