Another great Bisnow event this morning, providing an update on the BTR sector (with a regional focus on Birmingham) and some excellent insights from key players, including L&G, Watkin Jones, Cortland, Hub and Urbanbubble.
The BTR sector is seeing increasing levels of capital deployed, and around 70% of that is invested outside London. That capital comes from the US (where the BTR sector is more mature than in the UK), from Europe (where the UK is seen as an attractive and relatable market for outward investment) and from the Far and Middle East. Interestingly, this is being matched by strong confidence from domestic sources of money, especially from UK Pension Funds (for which regulatory changes since Brexit have allowed much more flexibility in investmetns). As a result the "floodgates" seem to be opening for the sector.
There are though challenges related to build costs, with inflation experienced across the supply chain - the real question is whether this is temporary. Similarly, energy cost inflation is challenging the value proposition of assets, but this is where continued innovation and focus on sustainability are key.
With more investment and development will come a depth in the product offering and choice - it's not all about affordability, as consumers want to be able to choose the product and the price-point. "Sub-urban" BTR is a well established concept in the US (to include single family offerings, in the form of semi-detached or detached homes, or "horizontal build" assets), but this will require the sector to unlock greenfield/brownfield sites. In "vertical build" urban BTR assets, the young professional single-person household continues to dominate, with demand for studios/1-bed flat offerings still outstripping supply.
On the operational side, the sector continues to better understand the mind of the renter - "amenities" continue to be top of the list of demands, but it is important for things like gyms, outdoor spaces and club/dining lounges to be provided in a clever and appropriate manner. The post-pandemic way of agile living will probably see a continued focus on the provision of co-working spaces and a clear intergration with the local community. Thereafter, keeping young families in BTR assets will require early-years learning and nursery type provisions.
In relation to proptech, developers and operators want to better understand how occupiers are using the buildings and to automate many of the property management tasks - why do you still need an individual occupier to alert you that their washing machine/fridge has a fault, or for the maintenance personnel to identify which laundry shute is blocked? There is a longing to see further intergration of "smart" technology within the building fibre.
Who is deploying capital into Birmingham's BTR, and why. The neighbourhoods attracting the most investor and development interest. What the current pipeline is and if planning and policy will allow it to be built. What Birmingham's renters are looking for in terms of design, amenities, ESG, health and well-being. The innovative solutions maximising building efficiency, optimise comfort and productivity. Fusing living and working — how to prepare for the trends in working from home and co-working that are transforming BTR space.