Days after inking a deal to release its half-a-billion-pound stake in the City of London office tower the Leadenhall Building, Canadian developer Oxford Properties has told the media it is planning a push into the UK residential sector.
According to British trade publication PropertyWeek, the global real estate arm of Canada's OMERS pension fund said it could commit 'in excess of £1 bn' to the build-to-rent sector, as part of its 'next phase of evolution'.
'The residential sector is the largest investable asset class in the world and is something we had not spent any time trying to do in the UK,' Oxford's executive vice-president and senior managing director for Europe Paul Brundage told PropertyWeek.
The global platform recently cashed in on its Paternoster Square office assets in London and also agreed with British Land to sell its current UK headquarters, the co-developed scheme dubbed 'The Cheesegrater' (pictured), to Hong Kong investor CC Land for £1.1 bn (€1.35 bn).
'Residential represents the smallest asset class globally for Oxford, and that doesn’t feel right,' Brundage added. 'I’d like to see that increase globally to a meaningful amount, greater than 10%. It will represent a significant part of our London business for the next phase of evolution.'
Brundage said it would parter with BTR specialists to develop large, new-build schemes, and was happy to take on development risk to achieve yields in excess of 10%. He suggested that the sector's stars were aligning as government policy, market demand and investor interest converged.
However, UK offices will remain in its strategy, with pipeline schemes at London Wall Place, the Post Building and St James’s Market.
'We are underweight and where do you put that capital to work? Piling a lot more money into London offices for the current cycle is not for us - maybe the next cycle,' Brundage said.
Oxford's managing director for Europe also hinted that further European expansion was on the cards, beyond its London and Paris focus.
'The fundamentals of Germany are pretty strong. Berlin is the most global city in Germany. Young talent wants to live there, which has fuelled a really strong innovation and tech-driven demand for space,' he concluded.
