Single-family investment hits record high in Q1 2023

Investment in single-family rental neared £600m in the first quarter of 2023 – topping the total for 2022. The sector accounted for more than a quarter of all living investment at the start of the year.

With £597m invested in the quarter – up 166% on the five-year average – single-family saw more activity than healthcare (£447m) and student housing (£135m) combined in Q1.

Total living investment came to £2.1bn in Q1 2023, down 48% on the same quarter last year and 27% below the five-year average. Investment in the student market was the lowest JLL has recorded since 2010, following an all-time annual high last year.

While healthcare dipped 45% on the five-year average, build-to-rent, bolstered by single-family activity, was up 14% at £1.5bn – or 73% of all living investment.

Two significant single-family portfolios traded last quarter: Project Domus, the 918-home Goldman Sachs portfolio in the North West, acquired by PGIM Real Estate for £175m, and 11 Countryside sites, which Sigma Capital forward funded for £205m.

As a result, the average BTR deal size, excluding corporate mergers and acquisitions, in the quarter was £90m – above the five-year average of £75m.

BTR further benefited from several major multifamily deals, including NFU Mutual, Harrison Street and Apache Capital funding Moda Living’s £302m Great Charles Street scheme in Birmingham via a debt-backed equity joint venture. Meanwhile, Australian superannuation fund Aware Super made its debut in UK BTR, acquiring a 22% stake in Get Living. Both deals were first reported at the end of the quarter, reflecting a return of activity after a slower start to the year.

Excluding M&A, single-family received more funding than multifamily for the first time on record, accounting for 55% of total BTR investment in Q1.

Investors funded close to 2,400 single-family homes, 1,500 of which were new homes. This compared to just 816 in Q1 2022.

In total, more than 8,000 homes and beds across the living sector secured funding last quarter – down from 29,000 in Q1 2022.

Jack Bergin, director for living capital markets at JLL, said: “As new and existing purchasers continue to invest with conviction into the single-family market, investment volumes have outpaced traditional multifamily volumes during Q1 of this year despite wider market headwinds.

“With traditional housing market sales slowing on the back of Help to Buy expiring and uncertainty regarding rising interest rates, single-family housing is a key pillar to support the delivery of new homes across the UK.”

Karl Tomusk, associate director for living research at JLL, said: “Single-family is in the right place at the right time. On the one hand, pressures on housing affordability are intensifying the need for rental homes at a time of low supply in the sector. On the other, investors are reining in their interest in city centre rental as they grapple with high construction and debt costs and the potential impact of mandatory second staircases in tower blocks.

“These converging trends have redirected investor focus to suburban family rental, a sector that can deliver much-needed income-producing assets with comparative speed and ease.”