UK property investment rises 48% in first quarter
The investment was up 48% on the same period of 2021, with CBRE forecasting a 25% increase in UK residential investment for the year.
Purpose-built student accommodation (PBSA) accounted for almost half of the total investment, coming in a £1.4bn. The was the highest first quarter volume since 2015, excluding the iQ/Blackstone entity-level transaction in Q1 2020.
Build-to-rent investment activity was also strong, up 9% from the same period last year at £860m. Investment was heavily weighted towards London and the South, accounting for 77% of total deals.
CBRE data show the positive momentum is expected to continue in the second quarter, with provisional figures showing £2bn of build-to-rent deals under offer, as well as significant PBSA deals in the pipeline. The appetite for other residential sectors, including co-living and affordable housing, also remains strong, said CBRE.
Andrew Saunderson, head of UK residential capital markets at CBRE, said: “Following unprecedented levels of investment in 2021, and in the face of some headwinds including higher construction costs and inflation, investment levels for the first quarter have certainly been healthy.
“Investor appetite for residential remains strong as the sector continues to go from strength to strength.”
Others, including Richard Pike, Phoebus Software’s director of sales and marketing, agreed.
Pike said: “HMRC figures confirm if confirmation was needed, that April was an excellent month for the property investment. There was a real stampede to cross the finish line, as determined shoppers managed to make their purchases before the end of the stamp duty holiday.”
However, Pike added that the current boom was not without problems. He said: “There are two problems for the market as we make our way into a post-closing world. First, the old supply problem. Unfortunately, this is a long-term problem, which seems to spread long-term all the time. As new build developments, planned to alleviate the housing stock problem, are affected by a shortage of materials and labour, we remain dependent on existing stocks. Second, is affordability. It’s great to see that the market is as dynamic as it is, but has the stimulus provided by new investors pushed things too far?”
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