EG LONDON RESIDENTIAL


Welcome to the suburbs


Institutional investors are ignoring prime central London and heading further afield to find the best residential deals, says Graham Norwood


W 34 www.estatesgazette.com 8 June 2013


hisper it quietly, but after many false dawns it appears the era of institutional investment in the residential private rented sector is


here at last following a series of high-profile, high-value deals concentrating on


Greater London. The two best known and


arguably most significant deals include Grainger, the UK’s largest listed residential landlord, joining forces with Dutch pension fund asset manager APG to launch a


£349m fund named GRIP. Another key announcement was PRUPIM, part of M&G


Investments, acquiring a £105.4m residential portfolio of 534 private rental flats owned by Berkeley Group in 13 locations across Greater London. “The expanding residential rental


property market, particularly in London and southern England, is rapidly gaining in appeal for institutional investors. We believe that the sector also offers clear diversification benefits,” says PRUPIM chief executive Alex Jeffrey. This seems a far cry from as recently as 2010, when analysts were bemoaning the absence of institutional investment in the British PRS. This was attributed to a toxic mix of concern over the sporadic supply and quality of rental stock, worries over management efficiency, a lack of bench-marking within the sector, and relatively low income yields. But institutions – unlike, say, headline-


grabbing wealthy international buyers – are ignoring the flagship developments in prime central London and instead heading to the suburbs. Research by Savills and portal Rightmove shows an almost exact coincidence between distance from


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