Investing in residential in London and the UK is a no-brainer given the level of demand and shortage of supply, delegates heard at Real Asset Media’s UK Investment Outlook: FDI and Capital Flows, which was held in London in July.
‘In most urban locations there is not enough housing, so let us not gild the lily,’ said Jessica Hardman, Managing Director, Head of UK Group, DWS. ‘The growth of build to rent and being able to institutionalise it is a fantastic opportunity. It is the piece that was missing from the UK jigsaw puzzle’.
It is likely to be a win/win situation, she said: ‘There will be winners and losers but mostly winners, I believe, because there is such demand, plus there will be lovely long-term income for investors’.
Build to rent is too new in the UK to have a track record, but the sector has real momentum.
‘Investment in apartments has increased 16-fold since 2006, while retail has gone down 10-12% in the same period’, said Tom Leahy, Director of Market Analysis EMEA, Real Capital Analytics.
‘Even investors who are hesitant about the UK are still interested in resi sectors like student housing or affordable housing,’ said David Inskip, Head of UK Strategy & Research, CBRE Global Investors. ‘We have recently launched an affordable housing fund, tapping into a Europe-wide urbanisation trend. It also plays into the ESG agenda which is something investors pay more and more attention to’.
The UK, along with the Netherlands, is leading the way in the ESG space, said Hardman: ‘It is a big focus and the lens through which we invest, along with urbanisation’.
Her favourite ‘all-singing location’, she said, is Stratford in East London, which is seeing a big growth in residential, improving infrastructure, a lot of inward investment from the Government and good local social amenities.
Affordable or entry-level homes are much in demand in cities across the country. ‘We are doing residential in the UK, forward-funding affordable, efficiently built one or two-bed entry-level apartments we then sell to international core funds,’ said Rob Sim, Managing Partner, Europa Capital. ‘They need proper efficient management, but it is not as complex operationally as a hotel or a care home’.
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