A new report has said that there are major opportunities for large-scale investment into the UK private residential rental market.
The report, by housing guru Professor Michael Ball, says that returns from the private rented sector are “significantly higher” than for commercial property.
Ball’s report, Making Sense of Large-Scale Residential Investment, was commissioned by Get Living London, which is turning one of last year’s Olympics villages into a vast new private rental quarter to be called East Village.
Get Living London is a joint venture partnership between UK firm Delancey and the Qatari Diar Real Estate Development Company.
The report says that residential property investment returns are over a third higher than for commercial property, are less volatile, and are trending upwards. The report also says there is a “dramatic” shortage of homes, meaning that residential property represents a strong institutional investment strategy.
The report’s research has shown that while historic understanding of the residential property market led investors to believe that the majority of the return was from the capital, in fact there are significant gains from rental growth.
It also says that in the commercial world, occupiers want less space as technology allows them to operate more efficiently. In contrast, as incomes rise, people want more space in their homes and are willing to pay for it.
In addition, commercial buildings suffer from depreciation as fashion and tastes change, whereas residential property can easily be adapted.
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