Although investment into the sector more than doubled from Q3 2024, for the year, UK BTR volume fell 41% to £3.4bn. However, CBRE believes Q4 signals a turning point, and further interest rate cuts are likely to spur a continued recovery during 2025.
CBRE noted a sizable increase in trading of stabilised assets, which accounted for 35% of total BTR investment in 2024 versus just 14% in 2023. The preference for stabilised assets is symptomatic of most UK operational schemes as the sector matures.
It also highlights challenges with securing forward-funding due to regulatory pressure, such as the need for a second stair core and delays caused by the implications of the Building Safety Act, particularly the requirements of Gateways 2 and 3.
Major deals from Q4 included Starlight Capital’s acquisition of three schemes, two of which were in Manchester with the third being in Basildon. Lloyds Living also concluded a deal with The Hill Group to forward-fund 264 BTR apartments in Stevenage.
Andrew Saunderson, head of residential capital markets at CBRE, said: “The significant rebound in investment in Q4 reflects continued investor confidence in the sector. As we move into 2025, we think more stabilised opportunities will be coming to the market, including both individual assets and portfolios.”
