PRS – a third of all tenure in UK?
Alistair comments: “Estates Gazette and MacFarlanes held a debate with panel members comprising Bill Hughes from Legal & General, MacFarlanes partner Anthony Burnett-Scott, First Base chief executive Elliot Lipton and Realstar Group vice chairman international Ryan Prince.
“The panel argued that PRS should be the way forward in trying to resolve the UK’s housing shortage. And whilst there has been a lot of talk about this in the past there has been no large scale investment. Now it seems institutional investors – in this case Legal & General – are beginning to commit to the sector.
“Talking at the event, Legal & General’s Bill Hughes said: ‘The PRS sector is underdeveloped in the UK and is an exciting opportunity…My guess is it should be representing around 30% of all tenure in the UK in the future. It’s principally an urban phenomenon and L&G would absolutely expect to be at the vanguard of that investment.’
“Hughes went on to explain that L&G is already £15bn committed to real estate in the UK and could allocate a further £10bn-£15bn, with a bias towards social infrastructure, of which residential is a major part. He pointed out that L&G already controlled around 27,000 residential units and over the past 18 months have put around £2bn towards residential including some PRS.
Alistair adds: ”The PRS subject is very topical at the moment. The first UK real estate investment trust (REIT) is also being launched by Mill Group this month, raising funds via a stock market listing and simultaneously offering shares to crowdfunding investors. With limitations on the availability of credit and high house prices, the demand for private rented accommodation is likely to continue to increase. There are still a number of issues which will limit the growth of this market in the short term, as larger house builders are reluctant to sell to PRS investors when better prices can still be achieved through the owner-occupier market However, with the continued and sustained increase in the demand for rented accommodation the sector is now finally being recognised as an asset class in its own right, providing a long term cash flow investment, underpinned by good quality purpose built accommodation.”
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