Property investors target Build to Rent

Around 71% of property investors plan to invest in Build to Rent, despite a sharp fall in new developments starting construction, research reveals.

Handelsbanken’s fifth annual Property Investor Report surveyed 200 real estate investors, property management professionals and landlords.

Almost two thirds (63%), intend to increase their exposure to houses during the next 12 months.

A further 59% plan to invest more heavily in flats, while 48% expect to increase their HMO holdings.

Property investment broadens

The bank’s chief economist, James Sproule, said: “Build to Rent is particularly striking in our findings, but there is also significant appetite for houses, flats and HMOs.

“That suggests investors are thinking carefully about where rental demand is coming from and which types of property are best placed to meet it.”

He added: “Strong rental demand remains an important part of the investment case.

“For professional investors, the question is increasingly not simply whether they want exposure to residential property, but which type of rental housing offers the right opportunity in a particular market.”

Rent demand drives growth

Among those planning to increase their overall property holdings, 58% pointed to strong rent demand as one reason for expanding.

Student housing is also attracting investors, with 44% intending to increase their exposure during the coming year.

The research did not establish how respondents planned to gain exposure to Build to Rent developments.

Houses were the most widely favoured traditional residential property type among investors planning further purchases.

Local markets shape plans

Mr Sproule continued: “There is no single rental market.

“Demand can look very different depending on location, property type and the needs of tenants, and professional investors recognise that.”

He added: “For investors, understanding local demand and selecting the right type of property will remain critical.

“The opportunity may look very different from one town or city to another, which makes local market knowledge and a clear investment strategy increasingly important.

“No doubt next year’s report will reveal whether our investors are changing tack and if so, where the new opportunities could be.”