The UK Multifamily sector recorded a total of £955.7m of investment in Q4 2020, taking the full year total to a record high of £3.5bn, according to the latest Marketview report from global real estate advisor, CBRE. Investment levels were up 30% on 2019 and 15% up on the previous record in 2018, illustrating the resilience of the sector in light of the challenges posed by the Covid-19 pandemic.
Additionally, operational performance remained strong in Q4 2020, compared to other sectors. According to the report, average rent collection rates were estimated to be at 97% with occupancy levels increasing to 88%.
Deals that completed in Q4 2020 included the sale of Realstar’s £570m portfolio of Multifamily and Student Housing as well as Realstar and Quadreal’s £100m joint venture forward-funding of Wembley Link with HUB and Bridges Fund Management. Outside of London, Long Harbour agreed the sale of its Skyline II scheme in Manchester to L1 Capital for £27.3m.
This positive momentum is expected to continue in 2021 with £1.6bn of deals under offer at the end of 2020. London accounts for 51% of this pipeline with £810m worth of deals under offer. The remainder is spread across the regional markets, including Bristol, Glasgow, Leeds, Manchester, Newcastle and Sheffield.
Peter Burns, Managing Director, UK Development and Residential Capital Markets, CBRE said:
“The market has shown incredible resilience in 2020 with Build to Rent (BTR) transactions bucking the general trend and delivering a record year for investment. As we enter 2021 this trend is expected to accelerate, with demand increasing as overseas investors are able to travel to the UK when international borders re-open. This demand, coupled with more developers shifting their focus to BTR product lines, and higher quality investment grade stock becoming available to purchase, we expect to see a significant increase in deal-flow with approximately £7bn of trades per annum by the end of 2025.”
“Additionally, COVID-19 has accelerated the drive for institutional grade capital into Single Family Housing. We expect to see a marked increase in Single Family Housing in 2021 as housebuilders and developer alike increase their volumes to sell into a maturing market place.”
Tom Sinclair, Residential Investment Director at CBRE Manchester, said;
“The pandemic provided an opportunity for the BTR sector to prove its resilience in tough market conditions. As a result of strong performance of the sector we have seen a significant increase in investor interest which has translated into record transaction volumes in 2020.
“Looking ahead, we anticipate demand for BTR assets to accelerate throughout 2021 leading to yield compression and further collaboration between investors and developers which will support the delivery of new homes across the UK.”
