UK BTR investment hits £1.7bn in Q1 2022

JLL reports £1.7bn Build to Rent investment transactions were made in Q1 2022, as living investment hits £3.5bn - supporting 25,000 homes.

Living room at PLATFORM_'s Build to Rent scheme in Bracknell - JLL | BTR News
Living room at PLATFORM_'s Build to Rent scheme in Bracknell. Image credit: PLATFORM_.

Investment into the Build to Rent sector climbed 50% in the first quarter of this year compared to last year. According to research from consultancy firm JLL, in Q1 2022, £1.7bn Build to Rent investment deals were agreed – compared to £1.1bn in Q1 2021 when activity was slowed by general caution during the pandemic. 

Funders have gained confidence in the Build to Rent sector as they have expanded routes to acquisition. JLL tracked over £300m in investment via regeneration leases with local authorities, allowing investors to secure assets with yields at a premium to Build to Rent direct lets. Traditional forward funding deals contributed 40% of capital invested, compared with 76% in 2021, reflecting the broader range of investment types.

“Investment is diversifying through a variety of deal structures as funders hunt new opportunities in a supply-constrained market.

“A combination of joint ventures, land, council leases and other funding deals last quarter will support over 10,000 homes for Build to Rent, 8,700 student beds and 5,600 beds in the retirement and care industry.”

Emma Rosser, Research Associate, JLL

The appetite for single family housing has also increased. Listed housebuilder tie-ups supported £335m in Build to Rent investment – including major deals for Crest Nicholson, Countryside Partnerships and Inland Homes. JLL tracked £190m in single family investment through a collection of smaller deals, bringing investment since the start of 2021 to over £1bn. At the end of the quarter, yields ranged from 3.25% for prime London zone 1-3 stabilised Build to Rent to 4.5% for secondary regional assets.

Across the broader living sector, investors agreed £3.5bn in transactions – including at least £1.1bn in student deals and £900m in healthcare and later living assets. This follows a record year for living in 2021, with £13.5bn in deals, according to JLL.

“The numbers reinforce what we are experiencing day to day, increasingly positive views across the living sectors and the likelihood of further yield compression expected, particularly on stabilised income-producing assets.”

Simon Scott, Lead Director for Living Capital Markets, JLL

JLL also report that public companies faced challenges during the quarter as the global IPO market ground to halt as a result of the war in Ukraine. However, despite these geopolitical challenges and record levels of inflation, private investment into living assets remain undeterred.