£30bn flows into multifamily Build-to-Rent housing

Investors have poured almost £40bn into the Build-to-Rent (BtR) sector over the past decade, with most of that cash being directed towards professionally managed multifamily housing schemes.

The findings from the property consultancy Knight Frank found that around £30bn, roughly 75% of total investment since 2015, has gone into apartment-led BtR developments.

That investor-led move is seeing the market being reshaped and move away from a purely development-led model towards a hybrid structure.

The firm says that completed assets are being traded alongside schemes still being built with early investors selling some of their first-generation schemes.

Room for growth

Knight Frank’s head of residential investment, Nick Pleydell-Bouverie, said: “While significant progress has been made in UK multifamily housing, the opportunity for scale and future market growth remains enormous.

“Completed build to rent homes currently account for just 2.5% of our rental households in the UK.”

He added: “Even a modest rise, by global standards, to 10% of the marketing being institutional ownership, would require the delivery of an additional 467,000 units.”

Since 2020, about 40% of operational multifamily transactions have involved new entrants to the sector with international investors featuring prominently.

Foreign investors lead

Knight Frank says almost 60% of that multifamily housing investment has come from overseas investors – mainly North American institutions.

The firm also says that construction cost pressures are easing with build-cost inflation at 4.5%, compared with a peak of 15.5% in mid-2022.

The consultancy recorded an average of 4.2 prospective tenants competing for each available home last year, while available supply remains almost 30% below pre-pandemic levels.

Population projections suggest further growth in the private rented sector with another 550,000 people entering the sector by 2036, rising to 1.5 million by 2050.