The momentum of transactions has continued during the Summer with more than £300m of capital committed to the sector, mostly via forward funding deals or land purchases for build to rent developments. Highlights included transactions concluded by Grainger in Milton Keynes and Salford and Realstar in Wembley. Indeed, the excitement created by Quintain’s acceleration of development around the national football stadium is making Wembley a hub for renters both now and in the future.
The restricted supply of up and let blocks continues with less than 10% of the capital committed over the quarter having been spent on this part of the market. Appetite for the sector continues to strengthen with CPPIB being the latest north American investor to indicate that it is ready to place equity in the UK market. Its potential platform with Lendlease is likely to comprise a landmark transaction for the sector.
With as much as £1.5bn of assets currently under offer and £1.39bn committed during the year to date, 2017 has the potential to easily surpass both 2015 and 2016 investment volumes. Another positive point for the sector over the Summer was the London Mayor’s adoption of more favourable affordable housing guidance for Build to Rent. Hence positive sentiment stays intact and we are continuing to see tightening of supply constraints having the potential to driving down yields in regional markets.