According to Savills latest report on the UK Build to Rent (BtR) market, Q1 2024 saw a relatively muted total of £555m of investment. A total of 10 deals were completed, following a flurry of transactions at the end of Q4 2024, the second highest year of investment at £4.5bn.
The research reveals that more than half of the investment was deployed in London which is its highest proportion since Q4 2022. Savills notes that this is as a result of two significant deals at Alameda and Beton in Wembley Park acquired by KKR, comprising of 490 BtR homes.
The UK’s BtR stock stands at 101,875 completed homes, up 17% nationally compared to Q1 2023. There are a further 54,814 homes under construction and 108,917 homes in the planning pipeline, including those in pre-application stage. The total size of the sector is 265,606 homes, up 4% compared to Q1 2023.
Polly Simpson, head of multifamily development, operational capital markets, Savills, comments: “The first quarter of 2024 has been muted, with fewer investment transactions closing. This does however follow an exceptional final quarter of 2023 and therefore does not come as a big surprise. Sentiment in the investment market remains strong with bidding activity increased versus the same period in 2023 which should support increased transaction volumes later in the year; and Q2 is also off to great start, with the recent announcement that Hines and Olympian Homes are set to deliver a new 519-unit residential scheme in Newcastle.
Although starts are subdued, it is encouraging to see that there are a still number of homes at the construction and permission stage which have the potential to also support increased starts and contribute to more completions in 2024 and beyond.”
Guy Whittaker, head of UK Build to Rent research, Savills, adds: Amid slowing build cost inflation, the number of completions in Q1 2024 has overtaken the number of starts for the second quarter in a row, widening to 3,404 homes from a gap of 421 homes in Q4 2023. This means the number of homes under construction is down 6% compared to Q1 2023, suggesting that investors are prioritising existing schemes over new ones.
Savills research also shows that homes with detailed permission remain at record levels of 59,000 – the highest number on record – however, the number of homes at detailed application stage is down 31% when compared to Q1 2023 which means that new sites are needed to secure the long-term delivery pipeline ahead of high demand.