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Investors home in on Build-to-Rent opportunities due to lack of traditional investment stock

Wednesday 7th May 2014

Many investors are looking to broaden their horizons by utilising Build-to-Rent opportunities; due to the lack of existing investment stock resulting in a change of strategy for many, CBRE has reported.
Delancey and APG’s acquisition of the £1.25bn Tribeca Square project in Elephant and Castle and Notting Hill Housing’s agreement with Sellar Design and Development to create a 1.5m sq development in Southwark are among the most recent major deals.
Jennet Siebrits, Head of Residential Research at CBRE, commented: “An increasing number of investors are starting to ‘move up the risk curve’ and are now looking to build their own bespoke rental products. The key attraction for this movement is the scale it allows them to access, and potential returns which can be achieved, which are significantly larger than those available for standing investment or forward purchase opportunities.”
Chris Lacey, Executive Director, Residential Investment at CBRE, added: “CBRE has recognised a significant increase in competition, coupled with low availability of existing product has led to substantial contraction in yields, particularly in Greater London. The reduction of perceived risk in the regions is now shifting investment strategy to established regional centres.”
Jason Hardman, Senior Director, Residential Valuation and Advisory at CBRE, concluded: “For the long term investor in private rented product the traditional ‘discount to vacant possession value’ approach is increasingly irrelevant, with the focus firmly on income driven returns. A new valuation approach is therefore emerging, reflecting true investment criteria.”

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