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Investment in UK Private Rented Sector Surpasses £3 Billion

Investment in the UK’s private rented sector (PRS) reached record-breaking levels in 2018, recording a total of £3.1bn according to data by CBRE.

Revealed as part of CBRE’s Q4 UK Residential Investment report, the impressive £3.1bn figure is up 33% from 2017, with more than £800m of deals currently under offer and interest from both domestic and international investors.

Key Regions of Investment

Birmingham – The UK’s ‘second city’ is attracting an increasing level of investment with two transactions in Q4 that saw £137m invested into the city’s PRS.

Manchester – The city of Manchester saw a total of £469.6m invested in the regional centres during Q4 2018, a figure boosted significantly by Grainger £396m buy-out of joint partner APG, allowing the residential landlord giant to fully acquire GRIP REIT and increase their PRS investment to £1.4bn.

Origins of Equity

According to data on CBRE’s Equity Tracker, there was a total of £33.8bn of institutional equity targeting the UK’s PRS sector, with the majority coming from North American capital.

Origin of institutional equitySource CBRE, Q4 2018

As shown above, equity from North America accounts for £15.8bn of the total money targeting the UK’s PRS; by comparison, the next nearest foreign investment (Asia) only provided £5.1bn to the UK’s PRS.

Jason Hardman, Head of Residential Valuations at CBRE UK, commented: “The performance of the UK’s PRS market clearly illustrates the drive from investors to seek income from a secure and stable asset class.

“2018 witnessed further landmark transactions both from a structuring, platform and location perspective. Innovation in PRS also came to the fore with major operators investing considerably to enhance the over tenant service.

“Going forward in 2019, we can only see these trends continuing and expect the volume of capital committed to grow at a faster pace.”

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