The Investment Property Forum (IPF)’s sixth annual survey shows a continued strong appetite for investment in UK residential property from institutions and large-scale investors, accounting on average for 8.6% of all UK real estate assets, the highest percentage for six years. Investment in the private rental sector now accounts for half of total residential investment, with long-term returns continuing to be the principal reason based on the massive shortfall of homes across the UK.
80% of residential investors in the survey intend to increase their investment in UK residential over the next 12 months, up from 60% in the 2016 survey. Three non-residential investors are now considering a move into the sector. A total net figure of £8bn is earmarked for investment in 2018, the majority of which will be channelled into the development of investment properties (£4.4bn) and the purchase of existing and newly completed residential homes for private rent (£3.2bn).
Three-quarters of investors expressed their intention to work with the UK public sector during the next three years to develop housing by creating partnerships with the public body supplying the land and the investor building the properties.
Stafford Lancaster, Investment Director, Delancey Real Estates Asset Management Ltd and Chair of IPF Residential Investment Group, commented:
“This year’s survey reaffirms what many of us involved in this emerging sector know – that a significant amount of capital is looking to access it, attracted by long-run returns, diversification and significant undersupply particularly at the more affordable price points.”
The annual IPF survey, based on responses from more than 50 institutions and large-scale investors. Respondents to the 2017 survey own or manage investments worth in excess of £3.5tr, of which UK real estate comprises around £240bn (approx. 7% of all assets). The average holding of respondents is £432m.