Two new housing deals in mainland Europe have given a flavour for the potential in the UK residential rental market, once institutional investors have a stake in the market.
Already the UK market has seen the Abu Dhabi Investment Authority back Fizzy Living with a £200 million investment, while Qatari Diar has backed Get Living London’s East Village rental properties in Stratford. But recent news from Holland and Germany shows how a much larger scale rental property market will encourage larger scale institutional investment, and the major portfolio deals that go with this. There is also the potential for these mainland European investors to step across the Channel and make investments in the UK, if they can see a liquid market with returns that meet their corporate requirements.
In Holland, Dutch investor Bouwinvest has agreed a deal to sell 723 homes to a joint venture involving Credit Suisse and Qatar Holding. With a transaction value of around EUR90 million, the portfolio includes 723 homes in 16 apartment blocks, with just over half of the units social rented, while the remainder are private rented homes.
“The changes in the rental market and the favourable outlook have increased the interest for investors in Dutch dwellings,” said Bouwinvest director Allard van Spaandonk. “This gives us an excellent opportunity to use capital to rebalance our portfolio.” As a result, Bouwinvest will reduce the volume of regulated rental properties in its portfolio to just 15%.
Bouwinvest has around 15,000 rental properties across Holland, mostly in open market rent and at the higher quality end of the market. It looks to provide those investing in the company with a return of 6%.
And in Germany, consolidation in the housing market has seen property company TAG Immobilien grow its rental homes portfolio to 70,000 homes, from owning just 4,000 in 2009. The portfolio is a mixed bag, including 32,000 homes in eastern Germany. Recently, chief executive Rolf Elgeti has been informally canvassing potential institutional buyers for the portfolio, according to German newspaper Handelsblatt. But Elgeti has said any offer will need to provide a good deal for shareholders.