Around 91% of investors believe strategies encompassing student accommodation, private rented sector (PRS), serviced apartments and retirement living - known collectively as beds for rent - will be common within five years, according to new research from Investec Structured Property Finance.
'The UK beds for rent sector is at a tipping point, which offers a real opportunity for the industry to respond and adapt to long-term structural changes that will help the UK catch up with the US market,' said Mark Bladon, head of living at Investec.
The Investec report, dubbed 'future living', finds that global investors are increasingly looking at replicating the US approach and taking a blended approach to the UK ‘beds for rent’ sector as one asset class, a shift being driven by structural trends impacting home ownership numbers, the growing maturity of the beds for rent asset classes as well as the attraction of the low but stable income characteristics they offer.
'For example, ‘generation rent’ don’t see home ownership as a necessary and achievable goal compared with their parents and therefore may rent for most of their lives,' Bladon said. 'Furthermore, the UK’s ageing population and a shortage of suitable high-quality real estate for the elderly means we can expect to see expansion in the retirement living sector to meet this inevitable demand.'
According to the data, a third of investors are considering increasing activity across ‘beds for rent’ asset classes, and all but PRS could experience a three-fold uplift.
Over half (56%) of investors see the retirement living sector as the most appealing asset class over the next 10 years, but there are challenges - including political uncertainty and increasing polarisation between London and the rest of the UK.
'The majority of investors are positive despite the negative impact of several macro-economic obstacles, particularly the political uncertainty around Brexit, which shows the strength of the UK market and the opportunity it presents,' added Bladon.
'As a result of these drivers, institutional investment in these specific areas and the wider beds for rent market is on the rise, including investing in blended schemes similar to those seen across the Atlantic,' he concluded.
