UK - The UK residential market is ready for pension fund investors despite being fragmented and dominated by amateur property managers, according to property firm Nice.
In an interview with IPE Real Estate, Martin Skinner, chief executive of Nice, said market factors such as constricted supply had created a gap in the market for multi-let residential.
"The fact that the residential market is so fragmented is the opportunity," said Skinner. "Residential outperforms other property sectors over a 20-year period because it has a longer life. But the barriers to entry are quite high, so we have first-mover advantage. In London, there's a supply—demand imbalance and a strong regeneration trend."
He added: "There's no competition because it's messy. You have to control the development, and handle everything from acquisitions to maintenance."
The firm cites Unite, the UK student accommodation firm which is 4.5%-owned by Dutch civil service scheme ABP, as the group's "only competitor" in the branded accommodation segment, and has followed its business model.
Nice's third fund, which is scheduled for its first closing in July, has an eventual target size of €50m, and €150m in debt. Forecast yield is 6%.
The group launched two earlier funds with Arch, a structured products specialist. This, its third, comes as part of a bid to build its fund management platform.
Citing London's "significant structural imbalance", Skinner said the firm could expand internationally in similar cities, including New York, Hong Kong and Tokyo - prime sites for corporate relocations.
"We are not going into new geographic areas yet but we are interested in population density and supply-demand imbalances," he said.
Its UK assets will be located exclusively in the capital.
That said, despite Skinner's optimism, fragmentation and unfavourable tax treatment are said to be scuppering attempts to widen investment in the UK residential, according to Savills director Jacqui Daley.
She told an audience at the launch of the IPD annual residential index last month the short-term investment horizon of housebuilders and developers, along with planning policy, and local resistance to developments made residential "unattractive".