Former Cortland investment boss Andrew Screen is preparing to bulk out a team at BNP Paribas Real Estate, ready to capitalise on growing opportunities in the UK’s fast-growing build-to-rent market.
Screen joined the company last week as head of residential capital markets after almost four years at Cortland, where he was chief investment officer for the UK. In his new role, Screen will advise developers and investors on negotiating and securing funding and investment opportunities.
Screen, who earlier in his career held roles at CBRE and GVA, is a long-time advocate of the BTR sector. “In the beginning of BTR, it was the first time in my life I saw that much money chasing a sector,” he tells EG in his first interview after joining BNP Paribas Real Estate. “I saw this boom coming, but 12 years ago it was difficult because there were no developers or big sites. Realtors thought it was a fad, and I was trying to convince them that it wasn’t.”
Now, Screen will be tasked with positioning his new firm for growth as the market develops from single-asset to portfolio deals, a task he will be hiring for.
“Everyone is looking to build portfolios and attract more investment,” he said. “Opportunistic investors will be looking for a five-to-seven-year hold period.”
But there will be longer-term buyers too, and Screen is expecting greater numbers of pension and sovereign wealth funds to put money to work in the market. He pointed to a variety of cities in which he expects activity to increase, including Birmingham, Edinburgh, Glasgow, Oxford, Reading and Cambridge – any location with good transport links and a ready market of renters to tap into.
Getting the message to those renters will be the next challenge. “Even today BTR is very much a B2B business,” Screen said. “Consumers want to rent apartments and they want the amenities that BTR offers them, but you don’t see developers advertising directly to them yet.
“The understanding of consumers is where we are still lagging. The next phase of BTR will be B2C marketing – you already see this coming from companies like Greystar, but it is going to increase exponentially.”
The market will also need to navigate a new macroeconomic environment in which inflation and interest rate rises present fresh challenges. Rent increases may offset some cost increases for developers and operators, Screen said.
“Construction costs have gone up by 20%, even 30% depending on the supply of goods,” Screen said. “The supply chain has been disrupted due to Brexit and things are not as straightforward as before, which places a lot of pressure on construction and construction costs. In addition to that you have inflation, which puts pressure on interest rates and in turn on capital returns. In terms of that, rent will go up. It’s interesting to see how this will pan out. I do not believe the demand for BTR is going to subside.”
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