A significant weight of capital chasing residential product with a number of established institutions and operators now facing increasing competition from new funds and platforms who are specifically targeting the private rented residential sector in the UK.
Up to now focus has been predominantly on London and the South East but the low availability of stock and compression in yields is shifting attention to other established regions in the UK.
Increased capital focussed on the sector and greater competition has emphasised the focus on asset management and led to a number of well capitalised specialist joint venture platforms being created with strong established management teams.
The inability to build scale quickly means that portfolios of existing product are keenly sort after. Case in point the recent sale of two portfolios the Brandeaux Fund ; one to established specialist investor Grainger and ; one a new joint venture between Residential Land/Ivanhoe Cambridge/Apollo Global Management for £160m and £100m respectively.
It is anticipated that demand and pricing will continue to strengthen in the short to medium term due to the market imbalance and ongoing limited availability of product
The residential investment market will continue to evolve and become more sophisticated as more management platforms emerge to attract large scale investment and as the asset class becomes more “institutionally acceptable“.