EDITOR’S COMMENT Is it just me or is there a little tinge of optimism in the air? Maybe it is because spring is just around the corner, or because it now looks increasingly likely that we might make it through the first six months of this year without suffering a recession. Maybe it’s the effect that the promise of that glass of cold, crisp rosé in some South of France sunshine has on us all around this time of year. Maybe we’re all just kidding ourselves in the hope that if we fake it, we make it. Who knows?
What we do know, however, is that people are talking about spending and growth again. After that quiet end to the year and a fairly gruesome January for many, those green shoots are starting to show and the market is getting ready to spend again.
And if you are in the market to offload a site that has potential to deliver some build-to-rent flats, then you might find yourself in the enviable position of turning down offers.
As revealed in EG this week, a trio of investors in the BTR market are pulling together significant amounts of capital to invest in the sector.
Legal & General is back in the market with around £500m from its L&G Retirement Institutional business to invest across the UK, Hub is scouring the market to add a further £500m of BTR schemes to its existing portfolio, while Amro Partners has some £200m to spend to boost its UK BTR portfolio value to £2bn.
Anyone who uses the term “nascent” for this sector can now only do so to describe it growing larger quickly. It really is no longer new or fledgling.
Investment in BTR has hit a new record every year for the past four years, topping £4.3bn in 2022, according to the latest Savills data. And indicators from conversations EG has been having with those active in the sector over the past few weeks are that we could be in for a fifth record year, despite the macroeconomic challenges.
It is boom time for BTR, and of course we couldn’t be happier for the investors that are benefiting from this.
But this positive story for UK residential comes at a time when we are still unable to deliver enough affordable housing for people and when we are hearing more and more stories about developers and providers of places we call home, places where we should be able to feel safe, doing what is akin to throwing their toys out of their prams when it comes to signing secretary of state Michael Gove’s fire safety contract.
Now, I am not saying that Gove’s approach is the right one. Forcing developers to foot the bill for something he has admitted wasn’t entirely clearly explained by government really isn’t fair.
But, surely, as developers, as builders of assets that house human beings, this industry wants to create and own safe places? That’s good business as well as the right thing to do. Why anyone wouldn’t want to sign that contract – even if they don’t have to – is puzzling to me. Yes, there is a cost, but let’s face it, this industry isn’t really going to foot the bill, it pretty much always finds a way to pass it on.
This is the moment when if real estate really wants to change the way people perceive it out there in the real world, it needs to stop focusing on the cost and capital – at least publicly.
Tales of multi-billion-pound investors threatening to pull out of the UK because they don’t think they should have to stump up money to ensure a Grenfell tragedy never happens again is exactly why the majority of the normal human race thinks property developers are evil and only care about money.
So just stop it. Sign a pledge, even if you don’t have to. Spend some money, as there really are plenty of other opportunities out there for you to make it – and more – back.
To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews
