Southampton to become future rental hotspot

Thursday March 12th, 2020

New research by CBRE has predicted Southampton to be one of the key locations in the UK where they expect there to a strong demand for rental accommodation over the next ten years. The data also suggests that the multifamily or build-to-rent (“BTR”) sector could grow substantially in the City.

The percentage of households in privately rented accommodation in the UK has increased from 13% to 20% over the past decade according to ONS data, while the percentage of owner occupiers has declined.

Southampton already has two major BTR schemes. Bow Square a development by Atlas Residential of 279 apartments (completed in 2018) and East Street a development of 132 apartments, scheduled for completion towards the end of 2020.

Latest figures from the British Property Federation indicate that investment into the sector has helped deliver over 40,000 BTR homes – [properties designed specifically for renters], which are owned and operated by a professional landlord. A further 110,000 BTR homes are under construction or in planning stages.

CBRE built a statistical model to analyse the demand drivers across all local authority areas in the UK. The analysis of the private rented sector (PRS) identifies three main factors influencing the greater demand for rental accommodation. They are locations with a higher percentage of population aged 25 to 34, high numbers of students and the relative size of the economy. These three factors have a quantifiable impact on the size of PRS in each town or city.

The research has revealed the top 20 locations in the UK that will potentially see the highest demand for private rented accommodation over the next 10 years. Other locations in the south included on the list were Brighton and Bristol.

James Brounger, Managing Director, CBRE Southampton commented: “With just one build to rent development up and running and a second scheme set for completion towards the end of the year, the fundamentals in Southampton are good for future investment.

“Southampton is one of the UK’s top 20 creative cities with the sector seen the fastest growing across the south coast. With two city centre universities the potential demand for accommodation continues to grow as graduates look to stay in the city.”

Following total investment of £2.4bn into UK multifamily in 2019, the outlook for 2020 is favourable. There is £1.5bn worth of deals currently under offer, illustrating the continued high demand for the sector. CBRE forecasts that total residential investment will increase by approximately 30% in 2020 due to demand from an increasingly diverse investor base from both domestic and overseas institutions.

Read the full report here.




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