"Since 2020, there has been a significant shift from urban areas to suburban regions, with increased demand for BTR properties, particularly SFH"
- Andy Jones - LRG
As the Build to Rent (BTR) sector continues to grow, and attracts increasing amounts of international investors, especially from North America, the ultimate question is where is there the most demand for investment in the UK.
It may seem obvious, but the next sought-after locations for BTR investment, which takes in co-living, multifamily, and single-family housing (SFH), are those with affordability, demand and connectivity, preferably adjacent to services and public transport.
Connectivity is especially relevant in the multifamily sector, particularly for urban BTR projects. The primary focus should be on evaluating viability and location, considering the proximity to amenities and transportation hubs, to ensure the proper demographic is present to make the project successful.
Starting with the emerging opportunities, these are being identified in Tier 2 cities such as Oxford and Cambridge, which boast strong demand drivers with specific pipeline requirements, making them attractive for new developments.
One to watch is the South West. Exeter and Bristol are getting interest, although interest has not yet peaked, despite the potential.
Perhaps the best locations, which have benefited significantly from investment funding, are the traditional BTR locations: the North West, West Midlands, South of England and Scotland.
In the North West, areas including Cheshire, Merseyside, and the Greater Manchester outer suburbs, have a large rental population, low land costs and strong family demand. Here, typical sites are between 50 and 150 homes in commuter towns, including Warrington, St Helens, and Bolton.
In the West Midlands, Wolverhampton, Walsall and Solihull present opportunities. In some cases, SFH is occupied by young families priced out of ownership, who benefit from the BTR USPs of security and modern living facilities.
In the South of England, developments such as Legal & General’s suburban BTR portfolios in Basingstoke, Milton Keynes, Swindon, and Ashford, are a pull because of the easy rail commutes to London, family-oriented demographics and land availability.
And in Scotland, key places unsurprisingly are Glasgow and Edinburgh, where there is rising household formation, and an undersupply of rental stock. Current schemes include those by Springfield Properties and Moda’s Holland Park in Glasgow.
For the multifamily sector at least, there is still the unwavering pull of London, Birmingham, which is benefiting from regeneration and tenant migration, Manchester, which is the largest BTR market outside London and an investor favourite, Glasgow, and Edinburgh, with the latter two also seeing fast-growing demand across SFH.
In general, SFH is becoming much more popular, and can be built at speed for those families in need.
Since 2020, there has been a significant shift from urban areas to suburban regions, with increased demand for BTR properties, particularly SFH. BPF figures from the end of the third quarter of 2024 indicate that the number of local authority homes completed, under construction, or planned stands at approximately 212,000, marking a substantial increase from 125,000 at the same time in 2020.
Added to that is the security of investors in SFH. These tend to be pension funds, which have long-term interests. I know, for example, a company which has drawn a diagonal line across the middle of England, going from Bristol to Newcastle. On their radar are Northampton, Coventry, Sheffield, Manchester, Birmingham and Leeds. This is where their money is being targeted, as opposed to the South East and London, which face rocketing construction and labour costs – essentially, the cost of everything is higher.
And while geographical locations are obviously key, sustainability and amenities are also becoming more important to investors, especially modern BTR developments with sustainable designs and high-quality amenities that meet the needs of tenant expectations.
For urban BTR / co-living, an important consideration is the extent to which a site can support these features. For SFH, it's simpler, with the age-old mantra of location, location, location still by far the most important investment consideration.
