The first quarter of 2025 saw the highest level of Q1 investment in UK Build to Rent (BTR) since 2022, with more than £800m invested, following on from a record breaking Q4 2024, according to Savills.
In Q1 2025, more than £500m was allocated to developing multifamily schemes in urban locations, reversing the recent trend of more limited activity in forward funding of large-scale developments. Savills research indicates that, for the fourth consecutive quarter, 12-month investment from international capital has outpaced that from domestic sources. International investors are increasingly targeting the UK Private Rented Sector (PRS), which is underpinned by compelling fundamentals including supply shortages, affordability constraints, rising rents and long-term demand.
Notable transactions included Hill & Peabody’s forward funding transaction with Goodstone in Dagenham; Legal & General’s partnership with Japanese developer Nomura to deliver over 1,000 high-quality UK rental homes. Their joint venture acquired its first Central London plot in Herne Hill, Lambeth, to develop more than 200 homes. Additionally, CompassRock entered the Bristol market, purchasing 295 apartments at Stafford Yard, marking the city’s first BTR transaction since 2002.
According to Savills, in 2024 18,000 BTR homes were completed, accounting for 8% of new build completions across England and Wales – up from 5% in 2019. Despite this rapid growth, BTR still represents only 2% of the UK PRS, demonstrating the sheer scale of opportunity for the sector. While BTR accounts for a greater share of the PRS in some UK cities, it remains far lower than in international markets, particularly the USA. For example, nearly 25% of PRS stock in Manchester is BTR, compared to 43% in Detroit and 74% in Charleston.
Savills notes that BTR’s market share is expanding due to new build delivery of the product, combined with divestment from individual Buy to Let landlords, resulting in BTR’s growth against a stagnant PRS. The advisor anticipates that BTR will continue to increase its market share across a wide range of locations, driven by new market entrants and a broader range of product.
Polly Simpson, head of multifamily development, Savills OCM, commented, “With over £800m invested in Q1 this year, following a record-breaking Q4, and growing demand for high-quality rental homes amid limited supply, the sector is seeing continued growth. It’s great to see so many forward funding transactions in a single quarter, testament to continued investor interest in delivering new, high-quality homes across the UK which is a trend we expect to continue for the remainder of the year across multifamily and single family developments.”
Read the orginal article: https://propertyindustryeye.com/strongest-q1-for-btr-investment-since-2022-says-savills/
