Greystar Says UK Values Could Rise As It Raises £625M For BTR And Student Deals

One of the world’s largest rented residential real estate investors and managers is anticipating a rise in prices in UK build-to-rent and student accommodation assets as the country starts to put a period of political and economic tumult behind it. 

“The UK has had its challenges since 2016, it’s been a rough ride, but it’s coming out of that now,” Greystar Senior Managing Director — Europe Mark Allnutt told Bisnow. “Things are looking a lot more stable, and that will start to be reflected in pricing and valuations. You could argue that London has been a bit undervalued compared to some of its European peers.”

Greystar just announced it has raised €725M (£625M) for a pan-European fund that will buy value-add multifamily and student accommodation assets in the UK, Netherlands, Spain, Ireland, France, Germany and Austria. The vehicle has seed investments in the UK, Ireland and the Netherlands.

Value-add assets could mean existing buildings or portfolios where Greystar thinks it can improve the income and cut the costs, thus improving returns; or developing new assets from the ground up.

Given the build-to-rent sector is new in Europe, deals in this sector are more likely to involve development, Allnutt said, although he pointed out that some of the first generation of BTR assets developed in the UK and Europe are held in closed-ended funds that are coming to the end of their life and might need to be sold.

He said household formation and urbanisation are continuing apace in Europe, and homeownership remains prohibitively expensive, so the opportunities to build new multifamily stock in Europe are plentiful. The fact that every investor today seems to want a “beds strategy” is not a big problem according to Allnutt, as the demand for product is so high. 

He said that although the student sector in the UK was hit hard by the coronavirus pandemic, he expects it to bounce back. 

“On the student side you are seeing a growth in higher education enrolment, but the amount of adequate student stock is not increasing in line with that,” Allnutt said. “There has been record demand from international students for UK universities, there has been a bar on them entering the country, and that bar is about to be lifted. The demand for existing student assets for next year is really strong.”