Scotland ‘set for Build to Rent boom’
Scotland’s Build to Rent (BTR) sector could be set to benefit from a flood of investment, fuelled by rental growth in Scottish cities and the diminishing likelihood of a second independence referendum, according to a new report.
Analysis by agents Rettie & Co revealed a lack of supply and growing demand for rental accommodation in Scotland’s biggest cities, boosted partly by increasing house prices, are pushing up rental levels. Rents in Edinburgh have risen from an average of just over £800 per month in January 2013 to more than £1,000 in January this year, Rettie found.
It is a similar story in Glasgow, where rents have risen from about £600 per month in 2013 to £740. As well as rental growth, prospective investors can expect an attractive starting yield. Glasgow, Dundee and Edinburgh all offer yields of more than 5%, the report states – higher than Liverpool, Bristol, Manchester and London.
Earlier this year, Moda Living, with joint venture partner Apache Capital, bought the Springside site in the Fountainbridge area of Edinburgh “off-market” from property group Grosvenor with the aim of constructing a “build-to-rent village” in the heart of the city.
The £215 million development will deliver more than 500 new homes for rent in the Fountainbridge area, as well as the purchase of nearly 50 existing private rented homes. Moda aims to be on site by the end of the year, with the first phase completed by end of 2019 and final completion targeted for the end of 2022.
The developer also staged an initial consultation outlining its indicative plans for a £105m transformation of the former Strathclyde Police HQ in Glasgow’s city centre.
Andrew Meehan, senior researcher at Rettie, said: “Build to Rent has been a sector that has caused much excitement and anticipation in recent years, but, until now, the actual delivery of units in Scotland has been mainly a theoretical, rather than a practical concern. In 2017, this looks set to change. Both Edinburgh and Glasgow have seen major announcements of largescale BTR projects now in planning for development. These schemes will supply over 2,500 BTR units in Scotland’s two largest cities.
“While this is a step forward, Scotland still lags London and other major regional centres in leveraging institutional investment to deliver any volume of new housing at pace.”