Earlier this year, Investec published research showing that 91% of investors think ‘blended living’ schemes that incorporate a combination of build-to-rent (BTR), student accommodation, co-living, retirement living and/or serviced apartments will be commonplace in the UK within the next five years. Last month, Yardi and Property Week brought together a panel of residential experts to explore what makes a successful blended living scheme, the importance of good design and how tech can improve customer experience. Panel of experts Christian Armstrong, director of brand, product and technology, Get Living Mark Bladon, director, Investec Georgie Drewery, account executive, Yardi Systems Félicie Krikler, architect and director, Assael Architecture Beth West, head of development management, Landsec Simon Creasey (chair), consulting editor/features, Property Week Blended living schemes are already commonplace in the US – why do you think they haven’t yet really gained traction in the UK? Bladon: For a number of reasons. If you look at the most developed of those sectors in the UK, it would probably be purpose-built student accommodation and that’s only been going in one form or another in a meaningful way for about 10 years. In the US, the investor market for this type of product is much more mature. Also, the BTR market in the UK had a lot of false starts between 2000 and, say, 2010 where people were just not able to get developments off the ground, but that’s all changed now. People have taken a bit of a leap of faith and there is now trading product, so you can benchmark yields and you can look at it on a cashflow basis. So what we’ve seen is people that have been in a very specific ‘beds for rent’ sector have realised that they can leverage off their existing operational platform, off their infrastructure, off the location – there’s so many things they can now do to broaden their horizon. What are the key ingredients that you need to make a blended living scheme work for all residents, particularly in terms of things like amenities provision? Armstrong: Amenities are really important but you have to think ahead, do some research and speak to your existing residents and prospective residents about what amenities they would actually use. I’ve seen some stunning stuff on schemes like barbecue terraces and outdoor terraces and then it hits me that we live in the UK – this is not the US. So I’m going to be sitting there with my cappuccino on the outdoor terrace with the froth blowing off! Bladon: That’s where the skill comes in. These schemes still have to make a profit, so you can’t just keep pouring money in. Somebody described it as an ‘amenities arms race’. They’re almost turning student accommodation into hotels and then they’re charging students £350 a week. As a result, you might end up with a half-empty property. The most successful operators are going to be the ones that can find the right balance. West: That’s why I think we haven’t reached that maturity point yet – this amenities arms race is a very immature reaction to what people think is a single market and a single customer for this product, but there are loads of people who want this product. If we’re going to build housing that attracts a broad range of different people staying for a long time then we have to think about offering a variety of different affordability points. Bladon: I think there’s another issue that lends itself to a blended portfolio and that’s the power of building a brand that can be used across the whole lifecycle of your tenant. So you start with your student, then co-living, then they get into their mid-20s and they want to move into BTR. That [BTR] can take them from being single, to married with children and living in a three-bed, all the way up to potentially the age of 60, when they might move into...
Build to Rent
Yardi UK Think Tank
Just a few years ago build-to-rent (BTR) was a rarely used phrase in the UK. Now it is one of the hottest real estate sectors around. A think tank of leading experts convened by Yardi and Property Week discuss the extent to which BTR has matured, the challenges it still faces and where the sector will go from here. The Think Tank Panelists: Andrew Cook – investment manager, M&G Real Estate (AC) Lora Salomidou – product owner, The Collective (LS) Rebecca Taylor – investment director, Long Harbour (RT) Katherine Rose – director of data & advisory services, Prsim (KR) John Dunkerley – chief executive and co-founder, Apache Capital (JD) Russell Markou – head of PRS operations,Tipi (RM) James Pargeter – projects director, Greystar Europe (JP) Chair: David Parsley – contributing editor, Property Week (DP) DP: How far along is BTR to becoming a mature market and is it now considered an institutional-grade investment? JD: There’s a big difference in people’s perception of where they think it is and where it actually is. There are 110,000 BTR units under construction or in planning. I don’t think we’re really scratching the surface yet. I don’t think it’s as advanced as people think it is. LS: The Collective has come from a slightly different angle to BTR and is focusing more on the consumer. The main reason we have got to where we are with BTR is because there has been a fundamental change in the expectations of consumers. The investors’ point of view is slightly different, but if we compare the return on investment from BTR to build-to-sell it is very different, because investors don’t have to manage the property – companies like us do it. JP: It’s certainly not yet mature in terms of finished...
Managing Risk
UK Investment Think Tank
Yardi and Property Week assembled five property investment experts to discuss low-risk ways to find value amid fierce competition for prime property. Industrial, traditional PRS, build to rent and student housing were seen to offer opportunities, with a tough retail climate and political risk on the downside. Panelists Ian Benson: Finance Director, Kier Property Meg Brown: Director of equity placement, Colliers Howard Freedman, Partner/head of real estate and construction, RSM Jamie McCombe, Partner/head of IM, Cluttons Kris McPhail, Co-fund manager, Lime Property Fund, Aviva Moderator: David Parsley, Property Week contributing editor With prime property yields tightening and investors looking for value without too much risk, our think tank participants addressed the key issues of where funds should place their cash and what factors – both positive and negative – may affect their decisions and returns. Where are the hot sectors in real estate investment? MB: This is something we think about a lot, as we typically advise pension funds and groups where risk really matters, as they are investing money they can’t really lose. So right now we’re fans of things that are not correlated to economic cycles, and that’s largely mega-themes such as student housing, PRS and BTR, micro living and, to some degree, the co-working concept. JM: We feel capital growth is going to be more muted in this market, so there has been a flight to income return. We’ve been looking at some of those long-term income plays, such as hotels and student accommodation. The industrial sector has obviously been improving in the past 12 months, predicated on investors seeing some future rental growth, so yields have fallen quite significantly, but in the right areas and at right rent, there is still something to go for in terms of return. The prime end of the...
UK Honor
Software Provider of the Year
Yardi, a global provider of real estate technology, was proud to accept the Property Management Software Provider of the Year award at the recent Property Week All-Star Management Awards, which took place at the Grosvenor Hotel in London on the 3rd of November. The Property Week Management All-Stars Awards are held annually and celebrate excellence across all segments of the management of real estate – from AST and block residential, multi-occupier office and retail, to industrial and logistics. Property Week is the leading news magazine in the commercial and residential property market. Packed with news, features, opinion and analysis, Property Week keeps readers fully briefed on all the latest information from the industry, including major property deals, development opportunities and investment prospects. Martin Betts, Yardi sales director for the UK & Ireland, was on hand to collect the award recognising the company as Property Management Software Provider of the Year. “We are thrilled to have won this award and believe it reflects our continued commitment to providing innovative solutions focused on enhancing the customer experience and optimizing our clients front and back-office operations,” said Neal Gemassmer, vice president, international for Yardi. “We continue to actively invest in growing the suite of solutions that we provide to the rapidly growing residential ‘build to rent’ sector, as well as staying focused on investment, asset and property management solutions for the commercial market.” Yardi would also like to congratulate several clients that received awards during the evening, including LIV Group, awarded the BTR/PRS Operator of the Year, and GVA, which was named Property Financial Advisory of the...
Focus on Manchester
UK Think Tank
UK Think Tank: Insight from a recent real estate roundtable held in coordination with Property Week. Manchester is one of the UK’s most successful locations for large-scale private rented sector projects. But what are the drivers of success? Yardi brought together a think tank to discuss future developments in the sector. OUR PANEL OF EXPERTS Tom Bloxham MBE – founder, Urban Splash Matthew Howard – deputy fund manager, Hermes Real Estate Investment Management Antonio Marin-Bataller – investment executive, PATRIZIA UK Stefan Trebicki – project architect, SimpsonHaugh Paul Winstanley – partner and analyst, Allsop’s private rented sector and build-to-rent team Oliver Wolfryd – operations manager, Moda Living Claer Barrett – personal finance editor, Financial Times, and contributing editor, Property Week (chair) Why have you all chosen to invest and develop build-to-rent (BTR)schemes in Manchester? Antonio: Manchester scores highly from a demographic point of view, and the high level of interest from institutional investors makes the city a compelling story. The choice of city centre sites was relatively ample and it’s a very walkable city. Young people want to be in walking distance of transport, work, entertainment and friends, and Manchester has one of the highest retention rates for students following graduation in the UK. Matthew: Manchester was an obvious choice for us – it has all the drivers of urbanisation and the city centre has undergone a renaissance. Tom: When I first came to Manchester years ago, there were 200 people living in the city centre and you couldn’t buy a pint of milk. Now 30,000 live here, and I believe it’s only just started – there will be a lot more growth. BTR is very popular here – is Manchester going to have an oversupply problem? Tom: What I do worry about is that...
British Mixed-Use
Yardi Real Estate Think Tank
Editor’s Note: As part of a recurring series in partnership with Property Week, Yardi hosts Think Tanks on real estate development trends in Great Britain. Recently, Yardi brought together a panel of experts to discuss future developments in mixed use, a concept that is gaining traction in the region. The Panelists: Victor Nicholls Assistant Chief Executive – Bracknell Forest Council Michael Auger Regional Director, South – Muse Developments Alistair Shaw Managing Director (TV Centre) – Stanhope Ben Giddens Executive Director – Development – Quintain Alan Harris Partner – Montagu Evans Claer Barrett Personal Finance Editor – Financial Times (chair) CB: Let’s begin by debating what have been the biggest changes to mixed-use over the past decade. BG: The biggest change was the last recession and what that meant for development sites. With the residential tap turned off, you had to look to other uses to bring schemes forward. MA: Mixed-use is the new normal. The biggest change has been the perceptions of funders and occupiers. Ten years ago, they might have felt a mixed-use scheme was ‘pushing the boundaries’ and it was hard work to convince funders in particular that a scheme was going to succeed. Now, they actually want to invest in mixed-use schemes – that’s a fundamental shift. VN: [There is more] enthusiasm from local authorities towards mixed-use, and much more flexibility. Yes, we like our zoning and masterplanning, but that comes from the pressure we’re under to deliver housebuilding targets. But I definitely see more flexibility in the public sector. BG: We have flexible planning consent on several plots of land at Wembley Park where we have outline consent from the local authority to develop offices, residential, hotel space or student accommodation above ground-floor retail. This allows us to respond...
UK Think Tanks
Emerging Market Insight
Yardi will host a series of think-tanks that unite industry professionals in discussion on the hottest issues facing real estate in the UK. This week: what are the prospects for property as an asset class? A new plan may draw investors from the capital to previously overlooked northern towns. During the global recession, emerging markets remained steady as developed markets faltered. Since the recovery, the major markets–US, Europe and Japan—have recaptured the attention of investors. But will London’s assets continue to lead England or are regional markets promising prospects? It could behoove investors to look beyond London’s city limits for growth opportunities. The capital’s highly competitive real estate market offers few new opportunities; the bulk of existing investors are vying for coveted space in the city’s 70-80 successful high street locations. It would be a shame for investors that do not make it into those locations to take their resources outside of the country. The solution: transform London’s regional markets into more attractive prospects. The Local Growth Fund has allocated £12bn to merge Leeds, Sheffield, Manchester, and Liverpool into the “northern powerhouse.” Supporters do not plan to siphon London’s businesses or big investors. Instead, the emphasis will be placed on nourishing successful local businesses and attracting new resources. Hopes ride on the dawn of new investors, those beat out of opportunities in London, for example, and those who are new to the arena, such as Chinese investors who have received more flexible access to foreign markets in recent years. As a rising business center, the northern powerhouse properties can be developed to fit modern tenants’ demands: Occupiers of the new business center will be greeted with competitive rents, convenient mixed-use facilities with eco-friendly features, and pedestrian friendly access. The northern powerhouse can be quite appealing in...
