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£500bn investors herald golden age for investment into UK ‘beds for rent’ sector

Investec’s second Future Living report looks at how the pandemic has underpinned the sector’s evolution with data gathered from global institutional investors representing over £500bn of AUM.

 

Covid-19 has transformed global institutional investors’ attitudes towards real estate sub sectors, with
the ‘beds for rent’ categories emerging as clear winners, according to Investec Real Estate’s second
Future Living report. Investment into the sector is set to grow significantly, as evidenced by the five-fold increase in the number of investors committing over £1bn to the sector over the next five years.

A defining feature of Covid-19 has been the unprecedented disruption to what were considered the
traditional real estate sectors of office and retail. This is evidenced by the 85% of investors who
expect to either increase or maintain their portfolio allocation towards the ‘beds for rent’ sector
over the next 10 years, versus just 58% for office.

While the sector was becoming an increasingly prominent asset class before the pandemic, the
defensive characteristics it has displayed during the last year have turbocharged its appeal. Relatively
higher rates of both occupancy and rent collection, coupled with investors’ growing comfort level with
exposure to operational real estate, have fundamentally changed how the sector is perceived.

The findings have been revealed in Beds for Rent: The Golden Age, a global survey of more than 52
global institutional investors representing £514 billion in assets under management, commissioned by
Investec Real Estate, a leading UK provider of investment and development finance.

Mark Bladon (pictured), Head of Real Estate at Investec, comments:

“When we launched our first Future Living report in 2019, it was based on the idea that a new real estate asset class was emerging in the United Kingdom that would hold a powerful appeal for global institutional investors. It’s encouraging to see the findings of our second report prove this assertion. Quite simply, the ‘beds for rent’ sectors are now core to investors’ strategies, as a combination of accelerated structural shifts, the fact that everyone needs a roof over their head and unprecedented disruption has reshaped the UK real estate market. As long-standing funders in the space, it is exciting to be at the heart of this evolution.”

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