A new report by City analysts Peel Hunt says that the private rented sector has become one of the “hottest UK property niches”.
It also says that the “race for scale” in the sector has only just begun.
The report, ‘Real Estate: A game of two halves’, looks only at listed property companies and gives a ‘buy’ rating for Grainger, the UK’s largest landlord.
The report says there is “huge interest” in the private rented sector from both UK and North American funds, and yet the PRS is under-represented in terms of the stock market.
Praising Grainger’s management team, it says that the business has secured over £650m of PRS investments in the last 18 months, with a further £243m either in solicitors’ hands or dependent on planning permission.
The report treats the institutional version of the PRS as if it were commercial property.
The rest of the report looks at sectors including offices, shopping centres, doctors’ surgeries and self-storage.
It also looks at student accommodation, and in particular the institutional provider Unite. Peel Hunt has upgraded Unite to a ‘buy’ rating, reflecting what is sees as growth in the student housing sector.
While the Government has become notorious for private landlord bashing over the last couple of years, it has been encouraging of institutional ‘build to rent’ schemes and landlords.
The two very different parts to the sector are not necessarily exclusive – although Grainger makes a point of telling tenants “When you rent with us, you deal directly with us”.
However, London agent KFH was recently appointed to manage Britannia Point, a 182-unit PRS development by Criterion Capital.
The 17-storey building was converted to offices and was once voted London’s ugliest building.
Grainger’s latest acquisition last month is a portfolio of three tower blocks in Manchester with 192 private rental homes.