Build-to-rent schemes ‘key to Belfast growth in the fu­ture’

Belfast Telegraph - Business Telegraph - - News - BY STAFF RE­PORTER

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.”

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