Research article

Our 10 key findings

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conclusions

Here are our top 10 key findings for the outlook of investing in private rent

  1. Historically, income from residential assets has made up a much smaller proportion of total return than for other property investment classes. We expect that to change.
  2. Residential investors are switching their focus from capital growth to long-dated income.
  3. Risk-free rates will rise over the next five years, which will put upward pressure on yields.
  4. Investors can shrink their risk premium to compensate: they can minimise exposure to planning risk through covenants and to stabilisation risk through proactive letting strategies and realistic pricing. The Government can help by providing regulatory certainty.
  5. The outlook is positive for rental growth in strong employment markets. We forecast 17 per cent growth in London over the next five years.
  6. £2.7bn of BTR assets traded in 2017, 23 per cent more than in 2016.
  7. Many of the investors who will dominate the UK BTR sector in five years’ time may not have entered the market yet.
  8. Performance in 2018 so far suggests 50,000 student beds will trade this year, at a value of £5.3bn.
  9. Yields on student housing investments continue to sharpen due to strong investor demand.
  10. Student housing development prospects are strengthening in cities such as Nottingham, Reading, and Leicester.

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