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London

All eyes on the PRS as more than £2.85bn in capital is aimed at the sector

Say Jones Lang LaSalle in latest market research


London, 25th June 2013 - Jones Lang LaSalle has identified a wall of money in excess of £2.85bn that is currently being targeted at the Private Rented Sector (PRS) from UK and overseas client funds. The source of this capital varies, but includes existing UK investors, Housing Associations, overseas funds, private wealth and private equity. The figure of £2.85bn compares to £1bn aimed at the sector in 2012 and represents a 185% increase of capital.

Tom Henry, residential investment director at Jones Lang LaSalle said: “This is likely to be just the tip of the iceberg. The above figure does not take into account potential investment from UK Institutions such as Pension Funds, Insurers and third party Fund Managers – the majority of which are currently either deploying or looking to deploy capital into the residential sector. Fund criteria varies but the majority of PRS investors have a London or national focus and are investing in one of the following categories - Income producing investments, forward purchase stock, forward funding schemes, build to let development.”

This comes at a time when house prices are increasing rapidly, especially in the capital and demand in the rental market is predicted to soar. Looking at the rental figures available, the number of those renting in London grew by 28% or 164,000 households in the five years since 2007. 

Adam Challis, Head of residential research at Jones Lang LaSalle goes on to say: “We predicted that 2013 would be the year that Build to Let theory met reality, with rhetoric now translating to real estate transactions that are building the runway for the sector to take-off. Private Rental Communities will be an embedded part of housing stock in London and the South East of England, expanding choice and providing the more sophisticated property management platform that renters deserve.”