Investors looking for opportunities to gain reliable yields from the UK property market will be encouraged by the latest research from Savills, which concluded that the build-to-rent (BTR) sector has “huge” potential for growth.
The global real estate services provider said BTR is currently offering many opportunities for new entrants, since it is at an earlier stage of development than other segments of the property market.
Currently valued at approximately £9.6 billion, it could be worth almost £550 billion at full maturity, offering enough housing space to accommodate more than 1.7 million households.
Savills puts the total current value of privately rented housing in the UK at £1.5 trillion, less than one per cent of which is BTR property. Most of the value is owned by individual buy-to-let landlords, but this sector has recently come under pressure from changes in the UK tax and regulatory regimes.
The firm noted that, while private renting is by no means a new concept in the UK, large-scale institutional investors “have only begun to make their mark on the sector over the past few years”.
Collectively, the BTR, student accommodation and retirement housing markets could be worth £880 billion at full maturity, almost four times the current value of £223 billion.
Lawrence Bowles, Savills research analyst, said: “Common to all these sectors is the recognition that investing in where people live has great potential for investors, particularly those seeking long-term income streams.
“The fundamental demographic and economic changes supporting these sectors are difficult for investors and developers to ignore. Institutional interest will continue to grow as these asset classes mature and can increasingly demonstrate their track record.”
The increasing diversity of the UK property market underlines the amount of choice currently on offer to investors seeking capital growth and rental yields from real estate.
To find out more about current prospects and opportunities in some of the most exciting, high-growth property sectors, contact Experience Invest.