CITY Developments Limited (CDL) C09 : C09 0% has acquired a 250-year leasehold site in Birmingham, UK for a purchase consideration of £6.5 million (S$11.8 million), to develop an octagonal-shaped residential skyscraper that it plans to rent.

Called Octagon, the 49-storey tower will comprise 370 build-to-rent units and have an estimated total development cost - including the land cost - of around £110 million.

The development is part of CDL's expansion for its UK private rented sector portfolio, which has a pipeline of over 1,300 units including Octagon, the property developer said on Friday (Dec 17).

The purchase consideration for the 16,760 square foot site translates to £18 per square foot, based on its gross internal area of 359,329 square feet (sq ft). The site has a residential net lettable area of 258,170 sq ft, and a commercial net lettable area of 2,230 sq ft.

CDL expects it will complete Octagon in 2025. The 155 metre-tall tower will likely comprise 1, 2 and 3-bedroom apartments, a retail unit on the ground floor, as well as concierge services and resident amenities.

CDL's group chief executive officer Sherman Kwek noted that the private rented sector had outperformed many other asset classes amid market volatility, and "continues to display resilience and strong growth potential".

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Kwek said he anticipates keen interest in the property, which will "augment the quality of CDL's private rented sector portfolio and enhance our recurring income segment".

Octagon, located within the Birmingham city centre, will be part of the Paradise Masterplan - a landmark transformation project in the city that will develop 1.7 million sq ft of office space across 10 buildings, retail shops and a hotel with 3 new public squares. CDL also noted that Birmingham is the UK's second largest economy after London.

According to a report by Savills, £2.2 billion in capital has been invested into UK's private rented sector to date. Besides the UK, the property developer has also expanded into the private rented sector in Japan, with plans to include other key markets such as Australia. (see amendment note)

Shares of CDL ended Friday at S$6.78, down S$0.1 or 1.5 per cent.

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Amendment note: The story has been amended to correctly reflect the invested capital in UK's private rented sector.