The latest research from Ascend Properties reveals how much growth potential is left in the Build to Rent sector if the US multifamily market is anything to go by – which has been established for over a decade.
There are some immediate differences between multifamily and Build to Rent. The style of properties delivered in the US is more focussed on larger, family-oriented homes, with low-rise, suburban developments accounting for 70% of the market. In contrast, the UK’s model is more focused on apartment living for rental professionals – although this could change as this emerging market becomes more established.
However, both deliver tailor-made accommodation suitable for long-term living within the rental sector, with a focus on community and an extensive range of resident amenities. They also share other similarities, with both sectors seeing impressive growth which is estimated to continue in 2021.
In the UK, there’s an estimated 11,723 Build to Rent homes due to complete this year – a 22% increase in just four years. In the US, multifamily completions are estimated to top 327,718 units this year – a 19% jump compared to 2018.
The Build to Rent sector is unlikely to reach the completions seen in the US – as there are big differences in population and landmass. However the multifamily sector provides a glimpse of the potential growth Build to Rent can achieve.
Ascend Properties analysed the number of completions in both countries as a percentage of all new builds delivered to market. Research shows that Build to Rent accounted for 4.2% of all new build completions in 2018, climbing to 5.8% in 2019 and to a further 6.6% in 2020. This is an impressive rate of growth for a sector yet to fulfil its full potential.
“A comparison of the multifamily model and the Build to Rent sector isn’t quite comparing apples with apples, but the ethos is very much the same and so is the end result.
“Both focus on tailored accommodation that provides residents with a long-term option when renting and it’s clear that there is a very healthy appetite for this on both sides of the pond, as well as in many other countries.”Managing Director of Ascend Properties, Ged McPartlin
Research also suggests this potential could be as high as 20% of the new build market if the multifamily comparison is anything to go by. The long-established multifamily completions accounted for 23.3% of all new builds reaching the US market in 2018, with this number staying consistent in both 2019 (21.1%) and 2020 (22.2%).
With the growing Build to Rent sector, it might not be long before it’s accounting for the same proportion of new builds in the UK – if not more.
“The multifamily market is a trillion-dollar business and accounts for more than a quarter of all real estate investment in the US. While we have quite some way to go in achieving this sort of dominance in the Build to Rent sector, the sharp growth seen in recent years suggests we are well on our way.
“For Build to Rent to account for 20% of all new build completions is actually very achievable and we believe that not only will this be obtained in the coming years, but the sector will go above and beyond this as more of us turn to long-term renting as a life choice.”Managing Director of Ascend Properties, Ged McPartlin