News release

Build-to-rent investment slows to lowest level since 2019

Investment in UK living totalled £2.1bn in Q3 2023 – a 46% year-on-year decline – across build-to-rent, student housing and healthcare

October 25, 2023

Alyssa Dwek

UK Communications Manager
+447761763340

JLL research has revealed that BTR attracted £451m of investment in the quarter, down 75% on the same period last year and 62% below the five-year average, making it the quietest quarter since 2019. Research also highlighted that overall, deals were smaller, at an average of £36.7m down from £67m last quarter.

The volume of activity fell across both multifamily and single family. This slowdown followed a robust first half, which saw total BTR investment of £3bn, in line with 2022 levels despite challenging conditions in an inflationary environment. JLL research also shows that year-to-date investment in 2023 matched the five-year average of £3.5bn.

Whilst investment has historically been overwhelmingly focused on development deals (Q2 2023: 99%; Q3 2022: 81%), they accounted for a relatively subdued 64% of volumes this quarter. The total benefitted from Long Harbour’s forward purchase of a 370-home BTR development from Berkeley subsidiary St George on the last week of the quarter.

Simon Scott, lead director, Living Capital Markets at JLL, said: “We knew there had been a market slowdown, and these numbers are a harsh reflection of that. Our sense is market sentiment, particularly post the interest rate decision, is improving and the investment market is more confident on where pricing should be, so we expect a return to more normalised trading figures in quarter four.”

Research highlighted that living has received a boost from student housing, with total living investment figures landing on £2.1bn, down 46% on the £3.8bn transacted in Q3 2022. Student housing accounted for more than half (58%) of investment this quarter.

Some £1.2bn in deals reflected the most active quarter of the year so far for the sector and a 56% jump on Q3 2022.

Bolstered by these transactions, development deals accounted for 60% of student volumes, compared to a five-year average of 32%, funding close to 5,000 new student beds (Q3 2022: 2,085).

Research from the commercial real estate report also revealed that healthcare investment reached £416m in the quarter, falling 45% on the five-year average. However, this marks a substantial rise on the previous quarter (£95m), with activity driven by the retirement living market.

In total, investors backed 6,804 new homes and beds across UK living in Q3, including 594 later living and care home beds and 1,261 BTR homes.

Karl Tomusk, associate director for living research at JLL, said: “Q4 is already getting off to a strong start with a handful of significant BTR and student deals on the cusp of completion, but we’re still at a point of discovery in the sector. The market is getting to grips with an environment where interest rates are no longer near 0%. Given how much UK living has grown under those conditions, a period of adjustment is unsurprising. What hasn't changed is the operational strength of the sector, which will continue to draw in buyers looking for robust, long-term investment opportunities.”


About JLL

For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 106,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.