US builders muscle into booming UK rental-housing market

[LONDON] US developers are moving into the UK's rapidly expanding market for rental housing, including student dorms and senior-living facilities.

CA Ventures is a recent arrival. The Chicago-based builder plans annual investment starting at £200 million (S$350.8 million) a year, rising to £380 million by the middle of this decade, to develop rental properties in Europe, according to a statement on Tuesday. The company began with student dorms in the UK, and is now expanding into other types of rental housing. It has about US$13 billion in real estate assets globally.

"The UK is the top priority," Carlo Matta, head of Europe for CA Ventures, said by phone. "We are looking at the larger secondary cities like Birmingham, Liverpool, Manchester and Glasgow."

The push into Europe has been under way for several years. Last May, Harrison Street raised US$776 million for its second European property fund. The firm is backed by Colliers International Group Inc, the second-largest owner of student housing in the US Greystar Real Estate Partners, based in Charleston, South Carolina, partnered with Goldman Sachs Group Inc to run IQ Student Accommodation, the UK's second-biggest purpose-built student housing firm, whose portfolio is up for sale.

In the US, yields in student accommodation and the private rental sector generally are lower than in Europe because the market is already well supplied and there are fewer opportunities for growth. Firms like CA Ventures see European markets as less mature, and are looking to capitalize on the relative scarcity of privately operated rental properties.

For every 100 students in the US, you have 60 beds, Matta said. "If you look at the UK, for every 100 students you have 30 beds," he said.

The UK market is growing rapidly, adding 15 per cent more housing units in 2019, according to broker Savills Plc. Development has started to spread away from its traditional London hub, as firms seek fresh ground in the country's other cities.

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