_The Residential Investment Survey 2019: which UK sectors are most attractive to investors?
The report examines the markets that make up this emerging sector, from Student Accommodation, to investment-grade PRS and finally the Senior Living rental.
The report includes the findings of a new survey of major investors in the sector, sharing insights on Gross to Net, ideal lots size and future investment. The report also measures the future growth of the sector to 2025 against the largest commercial asset classes in the country.
Results suggest that appetite for Student Accommodation will remain steady in the coming years, while there will be notable growth in PRS and Senior Living.
The survey results also makes clear that some investors who may only be active in one of the three sectors may become active in additional sectors by 2024. For example, some 13% of respondents currently invest across all three sectors, while in 2024 this will rise to 35%. Some 28% of respondents are invested in two sectors today, and in five years’ time this will rise to 68%.
This echoes our expectations for increased diversification within Residential Investment, with investors spreading their exposure across age groups.
"The results suggest that appetite for Student Accommodation will remain steady in the coming years, while there will be notable growth in PRS and Senior Living."
The drivers of each sector are relatively distinct, with Student Accommodation linked to the expanding tertiary education sector, PRS responding to the massive shifts in tenure seen in the UK over the last two decades, and the underlying need for homes in many key areas across the country, while the Senior Living market is underpinned by the sharply ageing population and the need for age-appropriate housing that offers elements of care.
While there are significant differences in market drivers, there are key synergies in construction and operations, making a move across sectors even more appealing for investors.
The differing maturity of the markets, with the still-establishing Senior Living market sitting higher on the risk curve, means investors can blend their yields, with the expectation of yield compression in the future. This follows the trend seen in the PRS market in recent years, and the more mature student market over the last decade.
This year's report offers a snapshot of UK Residential Investment through sector analysis, growth forecasts and the most up-to-date new investor survey.