A survey of investors representing more than £514bn in assets has revealed that 85% expect to invest in build-to-rent over the next decade.
The sector is outpacing traditional asset classes, with just 58% intending to maintain or increase investment in offices and 47% in retail.
Investec’s Future Living report analysed responses from some 52 investors and fund managers.
The survey found that 42% intend to increase investment in beds in the next decade, with 42% aiming to maintain the same level. In the shorter term, 40% intend to increase investment over the next year, with 50% maintaining the same level.
Mark Bladon, head of real estate at Investec, said: “Quite simply, the ‘beds for rent’ sectors are now core to investors’ strategies, as a combination of accelerated structural shifts, the fact that everyone needs a roof over their head and unprecedented disruption has reshaped the UK real estate market.”
Simon Scott, JLL’s head of living, added: “Investment volumes are only going to grow. There is a lot of focus on logistics as being the most attractive asset class, but frankly it doesn’t offer the scale or diversification that the living sector offers.”
Some 73% of respondents said they believed investment into offices and retail was particularly risky, compared with just 4% of investors that are cautious of PRS and senior living. This figure rose to 8% for co-living, 13% for serviced apartments and 27% for student accommodation.
PRS is expected to continue to be the most popular, with 75% of respondents saying they are currently considering future investment into this area. This was followed by student and serviced apartments, both at 69%, retirement (63%) and co-living (62%).
Investec said there had been a fivefold increase in the number of investors committing more than £1bn to the sector over the next five years. During this time frame investors anticipate an average of £280.8m committed, equating to £14.6bn across all 52 respondents.
Ailish Christian-West, director of real estate at Get Living, said: “Build-to-rent in the UK is still in its early stages but there is a huge amount of capital support.
“Investors can get a good read on build-to-rent; they understand the demographics, the stability of cash flow and that their capital will be serving the community, which is aligned with the needs of their own stakeholders.”
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