Build-to-rent schemes ‘key to Belfast growth in the future’
DEMAND for quality residential rental property in Belfast could be met by more investment in build-to-rent schemes, it’s been claimed.
Property agents CBRE said developers were now looking at build-to-rent as an alternative to sites previously identified for uses such as offices or hotels.
Northern Ireland developer Lacuna and Welsh developer Watkin Jones last year announced plans to construct a build-to-rent (BTR) apartment block in the city’s Cathedral Quarter.
Robert Ditty, senior director of capital markets at CBRE, said: “The concept of ‘ build-to-rent’ is one that is now firmly established and regarded as a mainstream investment sector typically offering superior returns to other more traditional forms of investment.
“Residential demand, population growth and affordability issues with first-time mortgages is increasing demand for rental accommodation.”
He explained there was a “massive” market for professionally-managed resident schemes, with graduates and young professionals the likely targets.
“Recently qualified graduates will be accustomed to modern, professionally-managed student accommodation and will most likely prefer to move into the ‘step up’ equivalent when they graduate.
“This demand, which is commonplace across all major cities, is driving development but also fuelling institutional investor demand in the private rented sector,” Mr Ditty continued.
“Investors are attracted to a sector that offers stable longterm income potential and is less susceptible to cyclical variations than other traditional real estate sectors.
“BTR schemes are generally of a scale to appeal to institutional investors with blocks often constructed of around 300 units with scope for further phases of development.
“The tenant profile being granular should result in lower void risks compared to commercial sectors.”
Build-to-rent is a term for purpose-built residential rental accommodation designed solely for use as long-term rental accommodation. It is professionally owned and managed by an institutional landlord. CBRE said its research in Belfast suggested that young professional renters — generally graduates who have and will have been accustomed to purpose-built student accommodation — will drive demand for new purpose-built rental properties.
Mr Ditty added: “A key focus for Belfast will be ensuring BTR schemes can achieve and sustain rental values, ensuring development viability.”