Living investment in UK hits £6.8bn in H1 as big deals dominate
JLL tracks rise in £100m+ deals as investors scale-up projects
Investment into living assets hit £6.8bn in the first half of 2022 as funds continued to chase big-ticket deals.
The first half of the year saw some £3.6bn in build-to-rent, student and healthcare deals topping the £100m mark, accounting for 55% of spend over the period.
Overall, JLL tracked £2.8bn in BTR deals, £2.6bn in student and £1.4bn in healthcare during H1, including M&A and development deals, together funding some 40,000 homes. The total living investment is a 5% rise on the first half of 2021, putting the sector on track for another record year.
There have been 45 deals over £100m over the last 12 months, compared to just 30 such deals over the previous period, and 21 two years ago.
Some 33% of capital committed in 2022 was in deals of between £100m to £200m. This is the highest level on record, after these larger deals fell during the pandemic in favour of £200m+ portfolio deals and M&A, and traditionally smaller deals prior to that.
The largest deals included Greystar’s £388m purchase of Downing Developments’ 1,807 student portfolio of four student assets and Harrison Street’s sale of seven student schemes to Global Student Accommodation.
The increasing number of mid-to-large £100m to £200m included Scape’s £170m deal to forward fund a 713-bed student scheme in Hammersmith in the largest student forward funding deal to date.
In BTR, Cortland, Get Living, Grainger and Heimstaden Bostad all agreed funding deals over £100m. The average multifamily single asset forward funding or investment deal size has grown to £74m in 2022, compared to £50m in 2016.
BTR climbs as buyers double down
BTR has led the charge in terms of growth, rising 32% against the first half of last year. This was driven by established BTR funders, rather than new buyers. Repeat buyers accounted for all Q2 investment and hiked their spend by 77% in H1 2022 compared to H1 2021.
Where forward funding has traditionally accounted for the majority of BTR spend, so far in 2022 it has accounted for 45% of investment (or 56% including long income deals). This compares to 78% of deals as forward funding in 2019 prior to the pandemic.
Emma Rosser, research associate at JLL, said: “The prominence of mid-to-large deals over £100m shows sustainable growth for living investment, compared to the previous trend of smaller schemes and very large big-ticket deals around the pandemic.
“Seasoned build-to-rent investors are targeting larger assets, both in London and the regions. They are doing this via a variety of investment types, meaning the sector is also becoming less reliant on funding development and less exposed to rising inflation in the construction industry.”
Jack Bergin, associate for living capital markets at JLL, added: “Investment in build-to-rent last quarter has built on the momentum observed earlier this year. Domestic investors specifically have been a key contributor to activity in the second quarter.
“The fundamentals for investing in living assets remain strong, with a widespread, structural lack of supply and growing demand in cities, which will support investment throughout the year.”
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