The UK residential property market has officially been ranked as one of the most favoured sectors for institutional investment according to the latest INREV 2024 Investment Intentions Survey, further solidifying the UK property market’s place as a prime opportunity for real estate investment across the globe.
According to INREV’s latest Investment Intentions Survey report for 2024 the UK residential property market has been ranked as both one of the most favoured sectors and favoured countries for institutional investors, confirming the “strong momentum that has been building for the sector over the past few years” and establishing the UK property market as a provider of profitable opportunities for investment.
The rise of a preference for UK residential property as an asset class for global institutional investors has grown exponentially since 2021, where Cedric Bucher, CEO of Hearthstone Investments, highlighted that looking back to just three years previous, UK residential property did not even equivalently rank in the 2021 INREV report.
In 2024, the UK residential property market for institutional investors is much more understood by investors and consultants, with fund managers reportedly building a history of investment – meaning there is more data to benchmark against, including the recent creation of the MSCI UK residential property benchmark.
“There has been a shift from private to institutional investment in residential over the past 10 years with housebuilders adjusting their model and partnering with institutional investors right from the planning stage. In my view, the opportunity is clear and here to stay.” Cedric Bucher, CEO of Hearthstone Investments.‘‘
Taking into consideration the preferred sectors to invest in by institutions over the next two years, the INREV Investment Intentions Survey has ranked ‘residential property’ as the number one place for the first time in its history, followed by ‘industrial and logistics’.
When assessing the top preferred countries and sector combinations within the survey, INREV has stated that the two categories, ‘UK’/’residential property’, ranked among the top five combinations for investors, despite just 8% of the current residential share of property in the UK being held by institutions – which is significantly below the proportion in other investment markets.
While there has not been significant institutional investment into the UK living sector previously, the sector is “growing fast”. Accounting for just £100bn in a sector with over £1tn in value, the growth of institutional investment in the UK residential market is a prime opportunity for institutions as the fundamentals of the sector are increasingly attractive to investors, constituting of, a severe supply and demand imbalance, incredible rental growth, and resilient rent collection.
“A recent report from Savills, to which [Hearthstone Investments] contributed, outlined the structural need to deliver 1 million more homes for rent by 2031, and the key role that investors can play in helping to address the UK’s rental supply shortage.” Cedric Bucher, CEO of Hearthstone Investments.‘‘
At Beech Holdings we have a number of buildings within our portfolio that were purchased by institutional investors, with several freehold opportunities also currently available for institutional investment in Manchester.