An overwhelming and unquestionable opportunity exists to provide top-quality, semi-urban and suburban rental accommodation in southern England. Since there is a shortage of existing rental housing stock in these markets, new units will need to be built, creating favourable conditions for real estate investors.
High-growth locations in southern England
MGT has identified high-growth locations in southern England which are projected to significantly outperform the wider market due to a disproportionate share of the tech economy, combined with a highly educated population. MGT has labelled these locations Tech Towns.
Tech Towns are locations where housebuilders, developers and landowners have accumulated significant land banks. As the ‘for sale’ housing market cools, MGT predicts that partnership opportunities will emerge for real estate investors to provide forward-funding and development capital to catalyse delivery of rental communities.
Demand for semi-urban and suburban Build-to-Rent
The UK housing market is chronically undersupplied, and Build-to-Rent is an increasingly important long-term solution. While the majority of Build-to-Rent to date has been focused on urban, mid-to-high rise apartments, there is a significant and growing demand for semi-urban and suburban Build-to-Rent stock. This specific segment of the Build-to-Rent market is seriously lacking.
Tech dense hubs with a highly educated workforce
Technology rich environments in the UK attract disproportionate levels of innovation and growth, which in turn drives demand for high quality rental housing. A skilled, highly educated workforce is an important driver of prosperity — where there are high levels of education, there are high levels of growth. Tech Towns are locations where technology and an educated workforce intersect.
Professionally-managed, large-scale, Build-to-Rent residential is widely recognised as an essential part of the solution and in recent years there has been a significant amount of investment in purpose-built, town-centre rental apartments. While this type of development forms an important component in the rental equation, MGT believes that the UK needs a more diversified rental housing strategy.