Internos Global Investors is teaming up with Catalyst For Homes to find ways to attract more institutional money into the private rented sector
The fund manager is already working with C4H on a major investment project, with the target of creating a fund with up to £2 billion in final value. It aims to buy into a mix of private rented and social housing across around 15 sites in the greater London area.
The pair are sizing up sites ahead of construction, aiming to select those most appropriate for institutional investment in long term private rented sector housing. They have set an initial 30 year timeline for the projects, with the aim of satisfying investors who not only look at property, but also hoping to draw in infrastructure and fixed income investors.
“According to Investment Property Forum seminal research in 2014, the UK private rented sector is worth around £837 billion, of which only £18 billion – 2% – is currently in the hands of institutional investors, the vast majority being held by private amateur landlords,” said Andrew Taylor, head of residential investment at Internos. “This compares to the UK commercial property market where more than 56% of the £647 billion estimated value is owned and professionally managed by institutions.”
“This disparity provides a significant opportunity to grow institutional investment with professional management in this previously overlooked market. Couple this with a worrying outlook for global equity and fixed income returns and the UK residential market provides an attractive proposition for risk-averse / return hungry investors.”
Catalyst For Homes was established in 2010 as a community interest vehicle, with a blue chip board that aims to change the way homes in the UK are held by investors. The board includes Clive Bird, formerly of Taylor Woodrow and Berkeley Group, and Adam Sampson, former CEO of housing charity Shelter.
Adam Sampson, executive chair of C4H, added: “The returns from residential investment over the past decade have significantly outperformed comparable markets. The alliance with Internos provides an opportunity for increased access to this market for investors at the same time as addressing the desperate shortage of affordable housing which affects both individuals and the economic health of the nation.”