Investors are planning to commit some £7.8bn to the emerging suburban build-to-rent sector, a report has revealed.
Knight Frank’s Suburban Build to Rent Report examines the projected growth of the sector.
Since the start of 2020, just £275m has been committed to suburban BTR schemes. However, this is expected to rise significantly with major investments including a £1.6bn family housing platform from Apache Capital and a £500m joint venture from TPG Real Estate Partners and Gatehouse Bank.
Most recently, Goldman Sachs committed £200m to schemes from master-developer Urban&Civic.
Knight Frank estimates there are currently 2.3m households living in suburban areas around the UK. It said 60% of renters live in houses, rather than flats, providing opportunity for investors to expand beyond the standard urban offering.
Oliver Knight, head of residential development research at Knight Frank, said: “To date, the capital committed to the suburban BTR housing market remains a fraction of overall institutional investment into BTR. However, our analysis suggests the sector is set to see significant growth over the coming years, underpinned by strong investment and demand-side fundamentals.”
Jack Hutchinson, associate in the residential capital markets team at Knight Frank, added: “The forward fund or forward commit nature of these early transactions helps to de-risk projects which could otherwise be subject to a fluctuating sales market. Suburban BTR can also shorten development timeframes and release areas for development ahead of a sales delivery strategy.
“There is often the ability to improve massing on suburban build to rent sites with the adoption of efficiently-designed BTR units. Finally, the delivery of rental product on a development can assist in the early marketing of any sales product by creating a bustling and lively community in which people wish to live.”