With £2bn-plus already invested in the UK BTR sector this year, there’s no sign of the flood of cash abating. However, generally all of these proponents are looking at creating tall buildings in urban locations (mostly major cities) as this is the only way to get a catchment and scale which enables viability. At present, the early entrants to the sector such as Grainger plc, Legal & General and Greystar are enjoying relatively low levels of competition with many schemes either still on the drawing board or under construction. But, in due course, every UK city will offer an increasing range of private rental product to choose from. As this situation evolves, it may become similar to the student accommodation market which when it boomed left students typically able to pick and choose between half a dozen competing schemes. No landlord wants to compete on the basis of lower rents as this simply chases the market down so the long-term challenge will be how to differentiate your BTR product from the competition?
Access Self Storage has just secured a planning consent in Hackney for 138 flats and also an 86,300 sq ft replacement storage facility which cannily complements the living space they’re creating and also represents another income stream which is far less management and capital intensive. As someone, who has recently moved into a modest London flat I can certainly see the attraction of this synergy.
And, of course, we have the, as yet unanswered question, as to how much the working from home trend will become a permanent aspect of life. This poses a ticklish question for BTR developers as to the extent of co-working space they might provide or how they can make individual apartments more amenable to ‘WFH’. It’s a scenario which will most likely play out at ground level as this is invariably where the ‘amenity space’ of a BTR scheme is positioned. Developers will face the choice of installing everything from convenience stores to co-working space; and storage to swimming pools. They will need a deep understanding of their target markets and the wider economic and demographic characteristics of their locations.
Having previously been viewed as a predominantly high-end product, BTR will inevitably begin to embrace more utilitarian developments with appropriate pricing points. However, it may be the ability to ‘be different’ which is the most important factor for many BTR schemes in the battle to attract residents.