Long awaited activity in the build-to-rent markets pushed regional and outer London yields down in the first quarter of 2016, according to CBRE’s UK Residential Property Investment Yields snapshot.
Deals listed include LaSalle Investment Management’s £55m buys in Leeds and east London and Grainger’s purchase of 98 units at Kew Bridge Court, W4, for £57.3m.
Jason Hardman, senior director in CBRE’s residential valuation and advisory team, said PRS operators focused on London have targeted the outer boroughs where cheaper land values have made schemes more viable. Outer London yields, currently at 5.25%, could see further strengthening as more deals near completion. A lack of deals in central London meant yields failed to move.
In the regions, forward funding deals in Manchester, including Apache’s £128m funding of Angel Gardens, and the South West has led to movement of around 25bps for secondary assets and 50bps for prime assets.
UK RESIDENTIAL YIELDS Source: CBRE
| LOCATION | GROSS YIELD DEC 15 | NET YIELD DEC 15 | GROSS YIELD MAR 15 | NET YIELD MAR 15 |
|---|---|---|---|---|
| Zone 2 | ||||
| Prime | 4.25 | 3.25 | 4.25 | 3.25 |
| Good sec | 5 | 3.75 | 5 | 3.75 |
| Secondary | 5.75 | 4.25 | 5.75 | 4.25 |
| Zones 3-6 | ||||
| Prime | 5 | 3.75 | 4.75 | 3.5 |
| Good sec | 5.25 | 4 | 5 | 3.75 |
| Secondary | 6.75 | 5 | 6.25 | 4.75 |
| Outer London/SE | ||||
| Prime | 5.25 | 4 | 5.25 | 4 |
| Good sec | 5.75 | 4.25 | 5.75 | 4.25 |
| Secondary | 7 | 5.25 | 7 | 5.25 |
| Prime regional centres | ||||
| Prime | 6.25 | 4.5 | 5.75 | 4.25 |
| Secondary | 7.5 | 5.5 | 7.25 | 5.25 |
| Secondary regional centres | ||||
| Prime | 7.25 | 5.25 | 7 | 5 |
| Secondary | 9.75 | 7 | 9.75 | 7 |
To send feedback, email alex.peace@estatesgazette.com or tweet @EGAlexPeace or @estatesgazette
