CBRE’s latest UK Residential Investment Report notes that “international developers [are] circling the market” with £32.7bn of institutional equity targeting the UK private rented sector over the next five years. This is yet more evidence that investment in the sector is booming.
To reach these figures we need to deliver build-to-rent (BTR) at speed and scale – but while we love to talk about BTR, the supply chain is still catching up with investor demand.
Operators across the development, design, construction, build, operation and management phases are at varying stages of development in their BTR expertise. Often they’re still a long way behind the highly specialised suppliers of traditional residential, hotels and student accommodation, for example.
We need to learn from other alternative sectors and international equivalents. There are also some early lessons from what has and hasn’t worked in UK BTR’s nascent years, particularly in terms of integrating design, build and operation. By being more open with information and encouraging peer-to-peer learning, we can provide a more mature collective offer to international investors.
In FirstPort’s industry– property management – the challenge for most operators is capacity. As we step up our activity in this market, many new entrants lack the scale and reach to meet investors’ appetite to deliver multiple schemes, in multiple locations, while providing a consistently excellent service to customers.
There’s also variety in terms of how the model is delivered – whether in-house, fully or partly outsourced, or white labelled – so property managers need to be able to adapt to meet clients’ needs.
BTR capacity is about much more than boots on the ground to run the concierge and manage the building. Investors who don’t wish to become customer-facing businesses rely on us to market and let units, collect rent, manage treasury functions and look after health and safety compliance.
It’s a buoyant market, but to maintain high occupancy and premium rents we need to provide excellent customer service and an ongoing investment programme. Our investors are saying that they’re looking for longer-term partnerships than we’ve seen previously in the residential sector.
To capitalise on this moment of opportunity and maximise international investment in UK residential, we need to step up our efforts to adapt, specialise and – crucially – learn from others both in and outside the sector.