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CBRE says institutional investors can be attracted to private rental...
Published: 2010-04-14 09:24:14
CB Richard Ellis head of residential Nick Jopling told the company's State of the Nation conference last month that institutional investment can be attracted to the private rental sector.
Despite the UK’s strong tradition of home ownership, on a par with the US with ownership levels of around 68%, Jopling said: "Rental demand will increase. London has less home ownership than 10 years ago."
While 22% of US institutional investment goes into the private rental sector, the comparable figure for the UK is less than one per cent.
But a head of steam is building up. "A number of organisations already get it," Jopling said, indicating the HCA, HM Treasury and British Property Federation as well as some institutions and developers. But banks and many other developers and housebuilders are yet to see the benefits.
They may be persuaded by Kent County Council. "Owner occupation has reached its limits in Kent at 70%," said strategic housing advisor Brian Horton. With a requirement for 140,000 new homes by 2026, at a potential cost of £30 billion, the rental option appeals to the council – not as a panacea, Horton said, "but as part of the solution".
Flats and multi-family housing complexes, along US lines with additional facilities such as gyms and pools, would be most attractive to the necessary combination of government, developers, tenants and institutional investors, Jopling predicted. "Places that are more than just a home."
He added that government could support the development of the private rental sector by amending the rules governing REITs and stamp duty to make them more attractive to institutional investors.
Nick Jopling was speaking at www.cbre.com. Attracting institutional investors will be covered in the Affordable Housing workshop at SocInvest 2010, on June 16. Click here for the programme.