More overseas investors drawn to UK build-to-rent resi

ECE’s Leeds build-to-rent asset.

The UK’s undersupplied housing market and growing rental sector continue to attract investors from abroad with US-owned PGIM and Germany’s ECE among the latest.

While PGIM Real Estate today announced its first acquisition in the UK on behalf of the investors in its European core strategy, Hamburg headquartered ECE has “taken the next step in the strategic expansion of its activities in the British build-to-rent market”. It has taken over apartment buildings in Manchester and Leeds on behalf of the family of ECE’s founder, the late Werner Otto.

These assets include 1,750 residential units in total. A 320-unit asset in Birmingham was acquired earlier this year. In total, the build-to-rent portfolio held by the Otto family and managed by ECE now comprises a total of 2,100 residential units in the UK. All three assets provide a range of services including gyms, package acceptance, co-working areas, bicycle parking spaces, additional rooms for meetings, events, and guests, and a 24-hour concierge service.

Strength of sector confirmed by rapid letting

ECE managing director for the work & live business area Henrie Kötter said: “We are convinced of the opportunities in this real estate segment and believe that the strength and appeal of our offering has been effectively confirmed by the rapid and successful leasing of the apartments so shortly after completion.”

ECE said it plans further expansion in the sector, including in other European countries. The firm is currently developing the 101-on-Cleveland apartment building in London’s West End. This will provide 88 condominiums, 3,500 m² of retail space, and 15 affordable housing apartments.

PGIM Real Estate, the property investment and financing business of US firm Prudential Financial, has acquired Centre Square, High Wycombe, in Buckinghamshire which consists of 123 multifamily units for rent. The apartments are primarily one-bed and two-bed apartments, with over 110 parking spaces and three commercial units.

PGIM expects above-inflation growth in UK BTR assets

PGIM said modest declines in UK residential rents are expected in 2020, “amid the challenging economic environment”. However, it expects above-inflation growth in the ensuing years.

PGIM Real Estate head of transactions UK, Charles Crowe, said: “We believe the private rental and build-to-rent sectors in the UK offer compelling investment opportunities and will look to enhance our exposure to this market.” He added that PGIM’s aim is to deliver long-term outperformance with low volatility through cash flow diversification.