Internos Global Investors, the €3.9bn (£2.92bn) owner-managed real estate fund management firm, has formed an alliance with Catalyst for Homes (C4H), a community interest company, to establish UK residential investment vehicles.
The pair will explore the formation of a range of direct and indirect investment vehicles that will enable institutions to invest in scale in the UK residential rented market, they said.
Internos and C4H are evaluating 152 residential development sites across Greater London with a view to selecting the most attractive for the institutional market.
Suitable sites are likely to provide a range of characteristics including asset management potential and up to 30-year income returns which are attractive to investors allocating from not only real estate, but also infrastructure and fixed income quotas.
Andrew Taylor, UK residential investment at Internos Global Investors, said: “According to Investment Property Forum (IPF) seminal research in 2014, the UK private rented sector is worth around £837bn, of which only £18bn (2%) is currently in the hands of institutional investors - the vast majority being held by private amateur landlords. This compares to the UK commercial property market where more than 56% of the £647bn estimated value is owned and professionally managed by institutions.
“This disparity provides a significant opportunity to grow institutional investment with professional management in this previously overlooked market. Couple this with a worrying outlook for global equity and fixed income returns and the UK residential market provides an attractive proposition for risk-averse / return hungry investors.”
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