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Beds For Rent: The Golden Age

The latest Future Living report looking at the UK Real Estate sector.

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Introduction to Future Living II

52
Global institutional investors fed into this year's report
£514 billion
In assets under management

When we launched our first Future Living report in 2019, it was based on the idea that a new real estate asset class was emerging in the United Kingdom that would hold a powerful appeal for global institutional investors.

 

I’m happy to say that in our second Future Living report, we have been proved correct. Even a dramatic turn of world events didn’t dissuade our view that what are now commonly known as the ‘Living’, or ‘beds for rent’ as they are also known, strategies, a term to encompass multiclass private residential property for rent in the UK – private rented sector, student accommodation, retirement living, co-living and serviced apartments, would soar in popularity.

 

The Covid-19 pandemic has emphasised what has been increasingly obvious to investors in the last few years, with the most appealing real estate investment characteristic being the fact that everyone needs a roof over their head.

From our poll of over 50 global institutional investors, we can now see that they are targeting the ‘Living’, sectors en masse at the same time as many are exiting traditional property asset classes. This demonstrates that the pandemic set in motion some seismic changes to the real estate market.

 

With many of the same investment characteristics in their favour, such as demographics, strong demand, shortage of supply and the need for skilled management, we believe we will see closer alignment in investment performance in the ‘Living’ world.

 

Quite simply, the ‘beds for rent’ sectors are now core to investors’ strategies and, as long-standing supporters of these use classes, it is exciting to be at the heart of this shift.

 

As the United Kingdom’s recovery from Covid-19 picks up pace, I expect to see an appetite for nationwide investment in ‘Living’ strategies and a new set of metrics taking hold, with the winners identified for their thoughtful design, development, asset management capabilities and customer care.

 

At Investec, we made a call on the ‘beds for rent’ sector a number of years ago, seeing our loan book exposure increasingly weighted towards this part of the market. Encouragingly, the findings of our research point to investors making the same bet. 

Future Living II - Contents

Institutional allocation and the impact of Covid-19

However, a defining feature of Covid-19 has been the unprecedented disruption to what were considered the traditional real estate sectors.

Build-to-rent shines as student accommodation comes under pressure

Prospects for the coming years are good too, with BTR having fared better than the office, retail, and leisure sectors during the pandemic.

Retirement & co-living: community spirit igniting once nascent sectors

The population of over 75s is set to increase by 56% over the next 20 years; a once nascent sector looks set to explode in the coming years.

The future of ‘beds for rent’

Two central hypotheses of the first Future Living report were that over the next five years the UK market would see a move towards a blended approach to investment in the ‘Living’ sector and that yields will continue to align.

Mark Bladon, Investec
Mark Bladon, Head of Real Estate, Investec

At Investec, we made a call on the ‘beds for rent’ sector a number of years ago, seeing our loan book exposure increasingly weighted towards this part of the market. Encouragingly, the findings of our research point to investors making the same bet.

Contact us

Mark Bladon

Head of Real Estate

Mark is Head of Real Estate lending responsible for over £1bn of loan assets, and specialises in providing development finance for industrial, residential and student accommodation projects across the capital stack.

Download the full Future Living II report

Beds for rent: The golden age