Whilst the COVID-19 pandemic has caused global devastation, it has also adversely affected the global economy. Almost all economic activities have been put on hold during lockdowns to curb the spread of the virus.
In June 2020, Global Economic Prospects labeled the impacts of the COVID-19 pandemic as the deepest global recession in decades, despite efforts by governments to cushion the effects with fiscal and monetary policy.
What Does This Mean for The UK BtR Industry?
Growth in Investment
The COVID-19 pandemic has significantly changed our approach to business, and things are bound to be different going forward. Some economic experts have hinted at a boom in investment activities in the coming years – especially in the real estate industry. And, comparing the patterns of past recessions in the UK with the pandemic recession, the recovery phase looks promising.
Build to Rent has successfully proven itself to be reliable during a time of market uncertainty.
Many investors will be looking for stable long-term acyclical investments, offered by the BtR model.
Management Companies to Increase in the BTR Sector
Management is a very focal point in the growth and success of any BtR development. However, the sector is still short on quality management companies.
We predict an influx of new management companies to the sector in the coming years.
In the last five years alone, we have witnessed various multifamily companies from the US enter the UK market.
In 2019, CBRE brought Telford Homes under its development arm Trammell Crow. With 40 years of experience developing BtR developments in North America, they even boast their own management platform.
Another US operator, Cortland, bought property manager LIV Group in August 2019 – and it was in the last five years that Greystar moved fully into the UK BtR sector.
Tenant Focus
It’s well known that service is one of the biggest differentiating factors that BtR delivers – and this isn’t set to change anytime soon. Whilst the push for increased building regs & safety continue to drive the entire construction industry forward, BtR will continue to tick the boxes – and go that step further.
We expect that moving forward, there will be a greater focus on overall wellbeing within BtR developments. Focusing on mental health as well as physical health.
Focus on Being Green
Most of the World now acknowledges the need to be greener, with the global sustainability aim of net-zero by 2050. All businesses are urged to meet these sustainability targets, with some even hitting this target already.
According to PBCtoday, Mace has already achieved its net-zero ambitions. Mace have managed a 50% reduction in their carbon emissions across the year, achieved through a variety of trials and solutions. Including, a 75% increase in renewable energy, a 75% reduction in business travel emissions, a ban on diesel generators and an increase in the use of cement alternatives.
With early adopters like Mace showing the industry how it’s done, we predict (& hope) that many developers will bring their own net zero targets forward.
Technology
The integration of property & technology has been on the rise throughout the last decade. And, it is expected to hit record highs in the coming years. According to Unissu, the total global prop-tech funding for 2019 was $13.85 billion, raised across 726 funding events. In the UK 2019, “over $5bn was invested in 805 UK prop-tech companies, five times more than Germany.”
In light of the benefits provided to us by prop-tech during the pandemic, more BtR developers are bound to continue with this accelerated trend. Boosting convenience, security & building management for the long-term.
Conclusion
Despite major setbacks faced by the global economy, BtR has proven itself to be steady & stable. Whilst some trends were accelerated & arguably created by the pandemic, (the focus on tenant wellbeing for example). We expect that throughout 2021 and beyond, these positive changes will continue to define the industry for the right reasons.
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