London developer Ballymore says “many” of the homes in its 8,000-plot London land bank will now be built for the rental market amid a weakening sales market in the capital.
Ballymore and Oxley Holdings are seeking an investment partner or forward funder for 272 units at Deanston Wharf, E16, next to the 3,385 homes at Royal Wharf.
Ballymore said this will be the first stage of a strategic commitment to large-scale developments purposefully designed for rent.
Ballymore Group managing director John Mulryan said: “As the build to rent market grows in London we believe we are well placed to be part of this growth.”
“Ballymore has large development and construction teams that finishes around 2,000 homes a year, but more unusually we also manage our own estates. Our estates management team has nearly 10,000 homes across London under management. The combined knowledge and experience within our teams will allow us to design, build and manage purpose-built build-to-rent buildings to the highest standards.”
Many housebuilders and developers are looking to the rental market as they seek to de-risk their forward pipeline amid slowing forward sales in London, and also to tap into demand from large-scale rental investors. Developers such as Bellway, Muse, Telford Homes and Taylor Wimpey have all forward-sold blocks.
It is a significant change from three years ago when the view among developers was that the bulk sale discounts demanded by BTR operators were too large.
Since then, however, the London new-build market has cooled considerably. Pricing for new builds fell 1.7% in the year to Q2 2017 alone according to JLL research, while in the year to Q3 2016, they declined by almost 7%.
Conversely, the weight of capital looking to enter the rental market has pushed yields down further and means operators are moving up the risk curve. Investment in the build-to-rent sector hit £2.4bn in 2017, according to CBRE.
BTR operators are being targeted to keep schemes and developments moving in the absence of forward sales.
CBRE and Johns & Co have been appointed by Ballymore and Oxley to provide advisory and transactional consultancy on Deanston Wharf.
Ballymore said schemes in Brentford, Bishopsgate Goodsyard, Cuba Street, Ladbroke Grove, Knights Road, Thames Road, and further phases of Embassy Gardens in Vauxhall could all have a rental component. It said it’s sales strategy at live sites at Goodluck Hope, Wardian London, London City Island and launched phases of Embassy Gardens and Royal Wharf will not change
To send feedback, e-mail alex.peace@egi.co.uk or tweet @egalexpeace or @estatesgazette
