Five things we learnt about BTR in Q1

The UK build-to-rent sector had a busy start to the year, with Knight Frank tracking a record £1.3bn of investment over the first quarter. Here are a few of the findings from some of the major agencies’ first-quarter investment reports released over the past week. 1. Operational assets shine in the spotlight Operational BTR deals accounted for the highest proportion of transactions since Q1 2021. According to Knight Frank, the operational sector accounted for 35% of the total investment into BTR. Operational deals to cross the line this quarter included private equity giant KKR acquiring two BTR assets for £250m on the Wembley Park estate. The assets total 490 homes and comprise two buildings, known as Alameda and Beton. In the same week, Goldman Sachs Asset Management and Tene Living bought three BTR assets totalling 261 homes in Wembley Park. The pair paid around £110m for the three buildings, known as Alto, Montana and Dakota. 2. UK surpasses 100,000 BTR homes According to Savills, the total number of completed build-to-rent homes now stands at 101,875. Savills said the total has grown by 17% over the past 12 months. Notably, the number of completions has overtaken the number of starts for the second quarter in a row – this quarter the number of completions was 3,404 homes more than the number of starts. Savills added that of 14 schemes completing this quarter, 10 were in London, contributing more than 1,700 homes to the capital. 3. Co-living climbs The co-living sector accounted for 20% of BTR deals by value in Q1, which makes it the sub-sector’s strongest quarter on record, according to Knight Frank. Some £258m was invested into the sub-sector, boosted by deals such as Hub and Bridges’ agreement to forward-fund the Yardhouse co-living scheme in White City, W12, alongside City Developments.  4. London beats the regions London accounted for 52% of total BTR investment in Q1, said Knight Frank, representing a sharp reversal from the slower investment volumes seen in the capital during 2023. The shift to the regions last year was especially prevalent in single-family housing, with regional cities capturing 77% of investment deployed into the sector versus just 23% for London. 5. Robust pipeline to look forward to According to Andrew Saunderson, head of residential capital markets at CBRE, the pipeline of investment in build-to-rent is robust, with an estimated £1.6bn currently under offer.  He added that yields in BTR transactions were stable this quarter for the first time since 2022, indicating that prices in the sector have stabilised. Saunderson said that with the headline rate of inflation now standing at 3.2%, the chances of a pre-summer interest rate cut have increased, which would be well received by the market. Image: Yardhouse co-living scheme, White City, W12 © Hub