On behalf of its BTR Fund and Access Development Partnership – a joint venture between Legal & General Capital and PGGM, Legal & General (L&G) has announced it has agreed the funding of a £100m development site at Hockley Mills, within the Jewellery Quarter Conservation Area in Birmingham town centre.
This is the second Build to Rent site in Birmingham and the 16th Build to Rent site for the L&G BTR Fund. L&G was advised by global property consultancy Knight Frank, and Sir Robert McAlpine will act as the developer at Hockley Mills.
“The Hockley Mills development further strengthens our existing portfolio, bringing our total number of schemes to 16 in 11 cities providing more than 5,300 apartments. The scheme will deliver high-quality, professionally-managed rental accommodation that can help to address the supply demand imbalance in Birmingham.”Dan Batterton, Senior Fund Manager, BTR, LGIM Real Assets
The Hockley Mills Build to Rent development will provide 395 homes – a mix of one, two- and three-bedroom apartments. The scheme will also include 28,000 sq ft of flexible commercial space for retail, leisure and offices and 116 car parking spaces.
The Hockley Mills site is on the periphery of the Jewellery Quarter – providing a strong micro location for Build to Rent homes. The site is centrally located in one of the most sought-after residential districts in West Midlands and is adjacent to both rail and tram links. This scheme will also provide a new entrance to the Jewellery Quarter train station.
The population growth in Birmingham is the third fastest – behind London and Bristol. The current population is 1.14m – an increase of c.100,000 in the past ten years. If this trend continues, Birmingham’s population is projected to grow to 1.18m in 2028 – an increase of 3.9%, and 1.23m in 2038 – an increase of 7.8%, showing the need for more housing. Build to Rent has continued to deliver a stable income return during the Covid-19 pandemic, and in Q2 2020, Knight Frank estimated that 95% of rent in the sector was collected.
“In the space of the last few years, the Build to Rent sector has really come into its own. It has cemented its position in the UK as an asset class and successfully evolved away from the private rented sector. Showing its resilience and relative counter cyclical nature of the residential sector, Build to Rent has remained largely unaffected throughout the coronavirus pandemic, as occupancy, rent collection and demand has remained high.”Dan Batterton, Senior Fund Manager, BTR, LGIM Real Assets
Build to Rent schemes – including the site at Hockley Mills – are well placed to benefit from some of the household behavioural trends and preferences that have emerged from the coronavirus pandemic; namely an increased need for homes with functional work space and convenient access to local cultural and leisure amenities.
“During periods of economic stress, residential assets are seen as extremely attractive by investors, in part due to both their resilience and counter-cyclical rental performance. Our view remains that, long term, the current Covid-19 crisis may well act as a catalyst for an acceleration of institutional capital into the UK’s residential investment sector.
“Since March activity has remained strong as investors seek to increase their exposure in the UK market – indeed, recent Knight Frank research found that 77% of investors are looking to maintain or increase their investment plans in the near future.
“As the UK’s largest city outside of London, investment in Birmingham’s Build to Rent market has always been strong. However thanks to the regeneration of the city centre and the upcoming HS2 line enabling even quicker links into the capital, demand by investors for high quality rental assets is certainly on the rise and is showing no signs of slowing down, despite the current wider market headwinds.”Hannah Badger, Associate in the Residential Capital Markets team, Knight Frank