Our second full week of 2021 has proven a busy one for us at Track Capital HQ with the release of two new exciting property investment opportunities. There have also been some positive reports from the construction industry with the Office for National Statistics reporting construction output in Great Britain rose past pre-pandemic levels in November 2020 for the first time and in the three months to November 2020 construction output grew by 12.4% compared with the previous three-month period due to growth in both new work (11.9%) and repair and maintenance (13.2%) which is great to hear.
Property news this week
- Gatehouse Bank sells property portfolio to Goldman Sachs for £150m – It seems that one of the leading global investment banks has seen the strength and potential in the UK’s private rented sector. Goldman Sachs sealed the deal on Gatehouse’s Thistle Build to Rent property portfolio comprising of 918 units across 15 sites, predominantly two-and-three-bedroom homes across North-West England in Greater Manchester and Liverpool. Charles Haresnape, chief executive of Gatehouse Bank, said: “Thistle has not only been a high performing investment throughout, it has also proved resilient during the Covid-19 pandemic, which is a key consideration in this market”. Gatehouse now plans to go again with the creation of another fund in 2021 to grow its single-family PRS portfolio to more than 3,000 units over the next five years which demonstrates their confidence in the market.
- Scrapping of S21 and new transferable deposits likely “very soon” – Kelly Tolhurst, a minister at the Ministry of Housing, Communities and Local Government, has announced that the long-awaited Renters’ Reform Bill is likely to be introduced to the House of Commons “very soon”. The Bill was announced in the Queen’s Speech of December 2019 and is set to include the scrapping of Section 21 which will abolish no-fault evictions and the start of the concept of lifetime deposits transferable from one property to another when a tenant moves. This is one of many Bills pushed back as Parliamentary and civil service time was occupied by Coronavirus and, until recently, Brexit.
- London office market sees strong end to 2020 with close to £5bn of transactions in Q4 – Although the London residential market has had a tough time lately, the city’s office market has seen a strong end to 2020 with momentum predicted to continue into this year. Knight Frank say that the London Office market’s strong underlying fundamentals along with pent up investor demand resulted in the strong end to the year with several deals closing in December resulting in £2 billion worth of transactions in that month alone. One of those deals was Allianz’s £400m purchase of a 75% stake in a British Land portfolio. Knight Frank suggest that opportunistic investors will target assets in the City and West End given that London’s office yields outstrip most major European gateway cities. Faisal Durrani, Head of London Commercial Research at Knight Frank said, “Following news that the UK has secured a deal with the EU and as the UK’s vaccination programme gathers pace, we expect even greater confidence to return to the market. In fact, the heightened demand for London assets has prompted yields to tighten in the City by 25 basis points to 4%, while the West End and Docklands remain stable at 3.5% and 4.75%, respectively”. This once again shows London’s resilience and versatility in times of uncertainty.
- PBSA operators must provide a student-first solution to match soaring demand – The purpose-built student accommodation (PBSA) market is one that had faced uncertainty with the COVID-19 pandemic but it seems that this is one sector which has seen outsized recognition from global investors throughout. PBSA investment volumes have fared better than other established real estate asset classes and the appetite to increase investment shows no signs of slowing. The underlying fundamentals of the PBSA market have highlighted the stability of the sector against all odds. UCAS data showed, in spite of the pandemic, applications in October 2020 from non-EU international students increased by 20% compared with last year, and the UK now also offers one of the longest post-study work visa systems in the world so international students can remain in the country for two years after graduating. It is the international students that really add strength to this market with their high demand and as they often possess greater accommodation budgets. While the student experience has taken a hard hit with students having to quickly adapt to being taught and socializing almost entirely online, demand has continued to soar. A recent Unite Students and Opinium survey showed that 93% of students would continue to live in student accommodation rather than at home (if allowed) from January. Covid-19 has shifted the priorities of students, combined with a high quality of service and flexibility, PBSA models are fast emerging to be the accommodation of choice and offer clear advantages over houses in multiple occupation (HMO) style accommodations. If you would like to know more about PBSA and the investment opportunities that it offers then please feel free to get in touch with a member of the team who will be happy to run through it all.
That is all we have for you this week. If you have any comments or questions on this week’s news summary then please feel free to send us an email at [email protected] – if not, see you next week.