According to recently released findings from global property consultancy Knight Frank, the value of the UK’s BTR sector has increased to £56 billion, up rapidly (by 60%) from £35 billion in 2019.
The figures are based on the firm’s examination of current operational BTR stock and stock under construction.
Meanwhile, based on analysis of the existing BTR pipeline, Knight Frank has predicted that the figure will almost double in size to £102 billion by 2028, a leap of 82%.
The most recent set of data about BTR’s growth was included in the agency’s yearly Multihousing Report 2022/23. It found that £3.2 billion of capital had been invested in the sector during the first three quarters of 2022, with a further £650 million still expected to trade before the end of this year.
As a result, the full-year investment would hit £3.8 billion, a 31% increase on the 2016-2020 long-term average.
Knight Frank’s analysis found that the majority of investment in 2022 (65%, or £2.15 billion) is still coming from pension and insurance firms, with the remaining 35% of capital committed by a mixture of propcos, REITs, and private equity firms.
There have also been overseas investments into this fast-emerging market, with North America leading the way regarding foreign capital being invested in the UK BTR sector. Knight Frank estimated that North America – where the equivalent of BTR, multi-family, is massive – made up 28% of the overall capital invested. Following closely behind was Europe, accounting for 23% of overseas investment, while Asia Pacific investors accounted for just 2%. Not far off half (42%) of capital was invested by UK companies.
The Knight Frank research came hot on the heels of research carried out by the British Property Federation (BPF) and Savills, which forecast that the number of completed BTR homes could increase five-fold to reach 380,000 by 2032. If this happened, the sector would be worth some £170 billion.
The projections, in partnership with Get Living and M&G, suggest that by 2032, 8% of UK homes for rent will be purpose-built, up from only 1.5% at present.
The research also suggests a ‘continued evolution’ in the market, with growth in the number of single-family homes. They are expected to make up almost a fifth (18%) of BTR stock ten years from now, compared to only 12% today.
It’s important to note that the BTR sector has faced criticism for being exclusive and unaffordable, aimed chiefly at wealthy young professionals. Still, those in favour point to the various amenities and extras in a BTR home – such as bills included – that make it accessible for many. Supporters also suggest demographics of the BTR movement are broader than people assume.