UK BTR investment activity exceeded £1.1bn in Q1 2023, according to new data from BNP Paribas Real Estate.
Around 75-80% of Q1 activity was outside London, with major deals recorded in the quarter including PGIM’s purchase of the Goldman Sachs portfolio for single family homes in Manchester and Liverpool for £190m, the Harrison Street, NFU Mutual and Apache forward funding of Moda’s Great Charles Street for £302m (pictured), and Realstar’s forward funding of Phase 2 of UNCLE, Leeds, for a reported £108m.
BNP Paribas Real Estate said it was seeing “increased appetite for London and London commuter belt development opportunities as new investors seek out lower risk locations”.
Rebecca Shafran, senior associate director, alternative markets research at BNP Paribas Real Estate, said: “Whilst other sectors have noted a more obvious slowdown in investment activity, the BTR sector has recorded a significant uptick of recent, particularly across both regional cities and in new territories such as single family housing. Investors paused for breath after the turbulence as a result of Liz Truss’s leadership and the worsening economic conditions, but we can see resilience and strong rental growth has resulted in a strong start to the year, in line with comparative quarters where economic conditions were more positive.”
Andrew Screen, head of residential capital markets at BNP Paribas Real Estate, added: “Investment interest and allocation of capital remains strong across the entire living sector, led by BTR, student accommodation and single family housing. New investors have also entered the market in the last 12 months with a lower cost of capital, increasing demand for investment opportunities and we anticipate a stark increase in transactions towards the end of the year, particularly across London, commuter belt and key regional cities.
“However, as it stands, higher interest rates are impacting investor levered returns, resulting in a shift of some investors towards higher yielding or value-add living sector investments.”
