Three London pension funds have joined together to create a London-focused fund to invest in build-to-rent assets in the capital.
Local Pensions Partnership, the London Collective Investment Vehicle, and the London Pension Fund Authority will seek to allocate several hundred million in investment.
The London Fund will launch in the late spring and will support developing housing and infrastructure in London. The close-ended fund will be managed by LPP and LCIV.
It will focus on build-to-rent and affordable housing, as well as community regeneration projects, infrastructure, digital infrastructure and clean energy. The funds have identified these assets as sustainable, long-term, risk-adjusted investments, while also making a positive social and environmental impact.
A spokesperson for The London Fund said: “Through the collaborative efforts of these London-based institutions, the London Fund is expected to benefit from increased scale. This allows us broader access to resources and a much wider investment pipeline than would be available to any of the individual organisations acting alone.”
The latest BTR statistics from the British Property Federation reveal that there were 76,408 BTR homes in London at the end of 2019, up 12% in a year. Of these homes, almost half (36,580) are in planning stages.
Jacqui Daly, director for residential research at Savills, said: “In London, there are real opportunities to increase supply. Having been some three or four years ahead of the rest of the UK, it is beginning to lag in terms of new pipeline.
“Uncertainty over the context of the new London Plan has held some planning applications back. The revisions in the latest draft will give more certainty to investors and encourage more schemes to come forward.”
Savills has forecasted prime London rents to rise 10.9% over the next five years, following three years of falls. In the commuter belt this is expected to grow by 6.7% in the period. It said new build supply in the capital will limit rental growth in the short-term, but predicted an uptick in the longer term.
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