Regional private rental sector outperforming London
The regional private rental sector (PRS) market is at its most buoyant yet and outperforming London, according to Lambert Smith Hampton’s national head of PRS, Ian Scott.
Currently advising on more than £1bn of PRS disposal and acquisitions across England, Wales and Scotland for institutional investors and developers, Scott says the regional PRS market is rapidly building momentum.
Lambert Smith Hampton is handling instructions in Manchester, Salford, Warrington, Newcastle, Birmingham, Glasgow, Edinburgh, Belfast and Bristol, and reports a strong appetite from forward-funding partners eager to invest in development schemes that could provide a catalyst for wider regeneration.
While Manchester has been an obvious target for many institutional investors over the past few years – along with Liverpool and Leeds – Birmingham is set to be the next city to peak as more supply comes onto the market over the next 18 months.
Newer markets of Nottingham, Coventry and Sheffield are also developing.
Mr Scott said “There’s still a lot of scepticism about the PRS market and whether it’s here for the long term.
“However, the success of the schemes delivered to date, which have attracted as many as 35 lets a month, demonstrate that there is real consumer demand for a new standard of high quality rentals in professionally-managed and serviced buildings.
“With continued Brexit uncertainty, we can expect to see renting become more attractive, and even necessary, for many would-be homebuyers.
“Greater demand will generate strong occupancy rates and stable rental growth – continued proof that PRS is here for the long-term.”
Mr Scott and his 10-strong UK-wide team have transacted in excess of £300m in the last two years and have handled some of the regional markets’ most high profile PRS deals, including Sheffield’s first deal with Platform on Sylvester Street and Salford’s Outwood Wharf to Invesco for £45m.
Looking ahead, he said: “Over the next 24 months we’ll see the forward funding deals of 2016, 17 and 18 come to fruition, and that will give investors a chance to start benchmarking operating costs, currently estimated at 25%, and to observe how quickly absorption occurs.
“While these outcomes will certainly shape the detail of future investments, we are in no doubt that PRS has the potential to transform the rental market by actively meeting the needs of more savvy and demanding tenants and cultivating longer-term leases.
“The strength of the regional markets to date, suggests that build to rent is only at the start of its boom.”
