Our survey showed strong demand for the amenity-driven services in the £40k to £80k income bracket. As a common feature in the US, where the Multi-Family Rental Market is a mature investment sector, this is a key finding for investors and developers looking to break into this emerging market in London.
This income band suggests a rent level anywhere between £1,200 to £4,000 per month, assuming a dual occupancy tenancy. The higher propensity of renters in London to share offers the potential for investors to deliver bespoke stock with even size bedrooms with en suite facilities that target markets at this rental level.
High demand and occupancy in the US is driven by well-located buildings in a network of cities offering wide-ranging services and amenities based on the hospitality model. Successful US providers monetise these additional services, which in turn cultivate community living and help retain tenants within their nationwide portfolios.
The data on travel times from home to work, is highly significant. The vast majority of renters in London commute for more than 30 minutes (45% for over 40 minutes).
This supports our long held view that there is rental demand in London’s outer boroughs and that build-to-rent can work best in the capital’s ‘doughnut’ where land values are lower and regeneration opportunities are bigger.
Investors should focus on delivering amenity driven products in these markets, where build-to-rent can compete against the residential sales market.
The main barrier to investors in this sector is the lack of large-scale purpose-built rental stock and operational platforms to run them, not demand.
There is a diverse range of demand in the market from low income earners to higher income graduates whose earnings are likely to rise.
Over the past 10 years, developers and managers of student housing have built up branded portfolios and management platforms to tap into the strong performance from student housing. Over the next 10 years build-to-rent will be the emerging asset class for investors looking to diversify their investment portfolios.
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