This article forms part of our ‘New How: Perspectives’ report: ‘Can real estate help solve the productivity puzzle?. To access this free report, please click on the download link to the right of this page.
One sector that has performed robustly during the pandemic is build-to-rent (BTR), with demand set to continue in the coming years as investors look to this sector to deliver long-term returns.
According to a recent report, over £1.8bn of capital was deployed in Q3 2020, which represents the highest ever quarterly total for this sector. Investors also committed to almost £900m worth of forward funding deals in the quarter, with a significant value of operational stock traded. If we do see the economic downturn persisting, the BTR sector (apartments and houses) will, regardless, be likely to remain buoyant, whereas “for sale” accommodation, by comparison, tends to fall off due to lack of credit, negative confidence and drops in sale prices.
And for as long as this sector is performing well, it can absolutely play a part in helping to solve the UK’s productivity puzzle. Why? Well, we know that the BTR sector aids mobility of the individual, enabling them to move from location to location with ease and without the long-term commitment of obtaining a mortgage. Employers with jobs to be filled can often only expect to fill them quickly and with the best candidates – possibly coming from across the UK (and beyond) – if those candidates have access to quality local rented accommodation.
BTR schemes are purpose built, with developers and investors creating a better built environment than in the past; they invest significant time upfront in designing and creating good quality, well thought out schemes, with technology playing an important role in creating efficiencies and in ensuring that there is good connectivity. In addition, we are seeing schemes designed to create co-working areas or hubs to enable individuals to meet, collaborate and develop business opportunities. All of which enhances the productivity of the home worker. What the recent pandemic has taught us is that working from home is, to some extent, here to stay and, for those individuals working from home, having a good quality working environment is key.
Despite the challenges brought on by Brexit and Covid and the slowdown of the world economy, the BTR sector continues to grow at a pace, with schemes being delivered to meet investor appetite and tenant demand. This in itself has a significant impact on our productivity as each scheme generates direct economic benefits to an area, including the creation of hundreds of construction, supply chain and operational/management jobs, an increase in resident expenditure in the area within local shops and on local services, as well as increases in council tax and business rates revenues.
The increasing attractiveness of the BTR sector, both to investors and tenants, ensures a bright future and its role as a preferred choice of accommodation for many will only help it to play an important role in driving productivity levels in our cities and regions.
To read more of our perspectives on whether real estate can help solve the productivity puzzle, download our free report using the link to the right of this page.