The third quarter of 2023 has seen a significant surge in Build to Rent (BtR) activity, indicating a robust and dynamic sector despite broader economic challenges.

Recent research by Savills highlights that the BtR market witnessed 18 noteworthy transactions in Q3 2023, culminating in an impressive investment volume of £448 million. This activity underscores the market’s vitality and the confidence investors place in BtR developments.

Construction and Growth Trends

Despite economic uncertainties that have slowed down the commencement of new projects, the number of homes under construction hit a record high of 59,043. This remarkable figure reflects the sector’s resilience and its importance within the UK’s housing market.

BtR’s Market Share and Expansion

Remarkably, BtR now constitutes 10% of all UK real estate investment. This share is a testament to the asset class’s endurance and its attractiveness to both local and global investors. The sector has also seen an 11% year-on-year increase in completed BtR homes, totaling 92,140 across the UK.

Geographic Spread and Planning Pipeline

BtR is not just growing in volume but also in geographic reach. For the first time, the number of local authorities with BtR projects in their planning pipeline has hit 200. Moreover, there are 112,511 homes in the planning stages, indicating a robust future for BtR.

Expert Commentary

Polly Simpson, Head of Multifamily Development at Savills OCM, emphasizes the record-breaking proportion of UK Real Estate investment funneled into BtR in 2023. The third quarter alone saw the year’s largest transaction, and the sector’s growth is expected to continue. BtR’s appeal is partly due to its inflation-hedging capabilities, making it a significant player in the investment landscape.

Regional Construction Activity

While the start of BtR schemes in Northern Ireland marks a new chapter, London has seen a downtrend in new starts, influenced by higher debt costs and regulatory shifts. However, the regions show resilience with 3,339 starts in Q3, a slight decrease from Q2 but a substantial increase from Q1. The rise of Single-Family Housing (SFH) schemes has been particularly noteworthy, adding diversity to the BtR offerings.

In conclusion, the BtR sector is demonstrating considerable strength and growth, promising opportunities for investors seeking to diversify their portfolios within the UK’s real estate market. With its proven resilience and the potential for continued expansion, BtR stands out as a vibrant component of the UK property investment landscape.