Investment into build-to-rent fell by 37% in Q3, with £465m committed during the quarter.
A slower period saw funds back 2,650 new homes, down 44% on the second-quarter totals.
Investors have inked £2.9bn in deals so far in 2021, providing finance for 14,328 homes, according to EG Radius.
This is a drop against the £3.7bn tracked in the first three quarters of 2020. The latest quarterly figure is also a fraction of the £2.3bn committed in Q3 2020 in a number of large transactions, including the largest single-site investment to date, with AXA’s £800m landmark Dolphin Square, SW1, purchase last September.
The biggest deals in Q3 this year included a number of new entrants, notably Australian banking giant Macquarie’s first direct UK BTR investment through new platform Goodstone Living, swooping on Eutopia’s £130m Camp Hill Gardens in Birmingham.
In Manchester, Singapore’s CDL Hospitality Trusts agreed its first investment into UK BTR with a £73.3m deal for Fiera Real Estate and Packaged Living’s first BTR development, The Castings (pictured). In yet another debut, BMO agreed a £40m forward funding deal for 258 flats at Hughes House in Liverpool.
Manchester was the favourite for investment and number of homes – with £138.4m backing some 660 homes, making up almost a third of the total funds committed. This was followed by Birmingham, Brighton and Gateshead as funds focused on the regions, with limited activity in London.
While London has potential, with upcoming moves from Moda Living and site acquisitions from Telford Homes in west London, investment during the period contributed just 6% of investment, EG Radius found. However, a handful of sites changing hands saw backing for 583 new homes.
CBRE advised both CDL and BMO on their sector debuts. Peter Burns, executive director for UK residential capital markets at CBRE, noted that continued travel restrictions had prevented some investment from international capital. “This has been coupled with labour and material shortages, which have delayed transactions,” he said.
Burns added: “Despite these challenges, investor sentiment remains very strong, we have seen competitive bidding for assets across the board and the occupational market is robust.”
CBRE has tracked some £2.9bn in deals under offer, going into Q4.
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