The Abu Dhabi Investment Authority (ADIA) has entered a £2.2bn (€2.59bn) partnership with Greystar Real Estate Partners to develop build-to-rent housing in London and surrounding commuter towns.
The sovereign wealth fund and global residential specialist are targeting a development pipeline worth approximately £1.8bn, funded by equity commitments of up to £750m.
A development site on Lombard Road in Battersea, London, acquired by Greystar in June for £31m, will become the partnership’s first asset.
In conjunction with the partnership, Greystar will acquire build-to-rent operator Fizzy Living from Metropolitan Thames Valley Housing for £400m and assume management of 1,000 homes.
The Fizzy Living brand and more than 30 employees will move across to Greystar.
The Fizzy Living assets are spread across London in Canning Town, Lewisham, Epsom, Stepney Green, Poplar, Walthamstow, Hayes and Silvertown.
Greystar said it would implement a “proactive value-add strategy across the portfolio”, including capital improvements and operational enhancements.
It is the second major joint venture between ADIA and Greystar involving European residential markets. Since 2015, Greystar and ADIA subsidiaries have invested in 6,000 homes for students and young professionals in the Netherlands under the OurDomain brand.
Mark Allnutt, senior managing director for Europe at Greystar, said: “Demographic trends and a severe structural undersupply of housing is driving demand for high quality rental homes in the UK, so this remains a high conviction investment strategy for Greystar.
“We have a highly successful relationship with ADIA in the Netherlands and now have a unique opportunity to create a rental housing portfolio of substantial scale in London and its surrounding commuter towns.
“The Fizzy transaction provides us with day-one access to eight operational assets and a host of new team members that we are pleased to welcome to Greystar.
“In addition, we will grow the portfolio through our newly formed partnership with ADIA from the ground up.”
Salem Al Darmaki, deputy director of the real estate and infrastructure department at ADIA, said: “We believe strong, long-term fundamentals are driving the demand for purpose-built rental housing in the London area.
“With the creation of this platform, our objective is to address this specific, growing market opportunity while expanding our relationship with a proven, world-class partner in Greystar.
“This is consistent with our approach of investing in high-conviction opportunities, at scale, to capture future growth trends.”