UK Real Estate Investment Showed Strong Rebound in Late 2023

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Direct Investment in Build-to-Rent and Student Housing Increased in Q4

JLL’s latest Living Capital Markets Review for 2023 shows that although the year was characterised as challenging, it ended on a high with a strong rebound in the final quarter for UK living investment.

According to the report, investment in UK living totalled £12.6 billion in 2023. This constitutes a 30% fall on the record levels of activity recorded in 2022. This is due to macro disruptions affecting investor confidence in real estate last year, such as economic and geopolitical issues. However, considering these factors, the sector proved to be resilient.

Build-to-rent, student housing and healthcare made up 31% of total direct investment in UK real estate last year – a record figure. Confidence in these areas was bolstered by ‘strong operational performance and continued undersupply’. The supply-demand imbalance has been a massive factor in UK real estate and UK buy-to-let, as investors are confident in the country’s continued demand and rental inflation moving forward. Many believe that this persistent demand makes buy-to-let worth it going forward.

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Build-to-Rent Investment

Investment in Build-to-Rent totalled £4.8 billion in 2023.

Investment in tall buildings has stalled due to uncertainty surrounding fire safety regulation changes in the future. Due to this, single-family housing has seen a surge in investment.

However, multifamily investment did persist, and active investors proved that, despite some concerns, build-to-rent is a fundamentally attractive investment that continues to draw in investors.

Read More: Want to expand your buy-to-let portfolio? Our expansive area guides range from buy-to-let properties in London to Leeds property investment!

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A UK student accommodation block where short supply has led to high investment demand for PBSA

Student Accommodation Investment

Investment in student housing amounted to £3.5 billion in 2023. It was a record year for capital invested in forward funding, forward purchases, and land deals. Investment totalled £1.6 billion, which is higher than any year on record.

Substantial revenues from high occupancy and rental growth dissuaded existing asset owners from selling, leading to a standoff in standing stock. However, as economic conditions stabilised later in 2023, there was a rebound in activity.

Further Reading: Looking at renting out a property for the first time? Our daily insights highlight the latest property investing tips to help you get started!

What are the Future Predictions for the Sector?

The JLL report also gives predictions for the sector in 2024. As rental growth stabilises, more asset owners will return to the market. The market will have to adapt to the loss of historically low rates in the sector, but more long-term, core investors will be attracted to the stability of the market.

Macro disruptions are still a worry for many investors, as geopolitical conflicts may continue to have effects on sentiment, supply chains, and inflation. However, the UK election is unlikely to significantly impact real estate investment activity based on the current policy proposals from the major parties. This view is shared by Hamptons, who have even observed a boost in activity in the past before a general election.

To learn more about the UK property market, take a look at some of our latest buy-to-let area guides, focusing on topics such as Ipswich investment properties and buy-to-let property in Middlesbrough.