Nearly three quarters (71%) of professional property investors plan to invest in Build to Rent developments, Handelsbanken’s fifth annual Property Investor Report reveals, despite a sharp fall in the number of new BTR homes starting construction.
Handelsbanken’s research found almost two thirds (63%) plan to increase their exposure to houses over the next 12 months, while 59% intend to increase exposure to flats and 48% to HMOs.
The findings suggest professional investors are looking at the rental market through a broader lens, combining established forms of residential property with purpose-built rental developments and shared accommodation rather than relying on a single model.
Among investors planning to increase their overall property holdings, 58% cite strong rental demand as one of the reasons behind their expansion plans.
It reveals that 71% plan to invest in developments in the Build to Rent sector.
Handelsbanken says the level of interest suggests purpose-built rental housing is becoming an increasingly important part of how professional investors think about residential property.
Traditional houses remain a major part of investors’ plans as almost two thirds (63%) expect to increase their exposure to houses over the next year, making them the most widely-favoured residential sector for increased exposure in the report.
However, the figures also point to substantial demand for different forms of rental accommodation.
Almost six in 10 investors plan to increase their exposure to flats, while close to half intend to increase their holdings in HMOs.
Student housing is also attracting interest, with 44% planning to increase their exposure over the next 12 months.
Handelsbanken says the findings suggest professional investors are positioning across different parts of the rental market.
Handelsbanken UK chief economist James Sproule says: “Professional investors are looking across a much broader range of rental housing than the traditional buy-to-let model alone.”
“Build to Rent is particularly striking in our findings, but there is also significant appetite for houses, flats and HMOs. That suggests investors are thinking carefully about where rental demand is coming from and which types of property are best placed to meet it.”
“Strong rental demand remains an important part of the investment case. For professional investors, the question is increasingly not simply whether they want exposure to residential property, but which type of rental housing offers the right opportunity in a particular market.”
“That is likely to mean greater variety in how investors build their portfolios, with traditional rental property sitting alongside newer and more specialised forms of housing.”
Sproule adds: “There is no single rental market. Demand can look very different depending on location, property type and the needs of tenants, and professional investors recognise that.”
“The breadth of investment intentions in our research suggests investors are looking to build portfolios that can respond to those differences. Build to Rent is an important part of that story, but it sits alongside continued demand for more traditional residential property.”
