3Rd May

Market Research Bulletin: Latest Build To Rent report indicates UK regions catching up to London


  • The British Property Federation’s (BPF) latest Build to Rent report shows that the regions continue to narrow the lead London has in terms of the total number of completed build to rent (BTR) units. The number of completed units in the regions grew by 44% to 14,212 between Q1 2018 and Q1 2019. The growth over the same period in London was 27%. Additionally, there are now 21,042 units currently under construction in the regions (London: 16,507 units) – a 17% annual increase from Q1 2018. In London, the number of units under construction only grew by 1% over the same period.
Btr Charts
  • The latest quarterly survey from RICS showed that in Q1 2019 net demand from occupiers fell by 13% as retail and office landlords increasingly turn to incentive packages, such as free-rent periods, to lure in occupiers. Around 48% of retail landlords that responded to the survey saw a rise in retail inducements. 26% of office landlords reported an increase in incentives to take office space.
  • The City of Westminster has removed permitted development rights in its ‘Central Activities Zone’ for changes of use from offices to residential. The council noted that over 300,000m² of office space has been redeveloped to residential properties in the Central Activities Zone since 2010, leading to an undersupply of offices, pushing up rents and affecting business activity and competitiveness. The Article 4 Direction came into force on 1st May 2019.
  • The Construction Products Association (CPA) has predicted that construction output will now fall by -0.4% in 2019 – revised down from their previous forecast of marginal growth of 0.3%. The CPA believes that a delayed Brexit is having an impact on investment, regional housing markets and the ability to deliver major infrastructure projects. However, Noble Francis, economics director at the CPA said:

"Conversely, the uncertainty has provided a boost to demand in small sub-sectors such as warehouses and ports, which are both expected to enjoy double-digit growth in 2019 and 2020"

  • The latest RIBA Future Trends survey found that architects in the North of England and the Midlands expect the highest architectural workloads over the next three months. Firms in the North saw a balance of +31 (the difference between those who think work will increase, and those who think it will decrease). The Midlands and East Anglia returned a balance of +20. The South was the most downbeat about future workloads, returning a balance figure of -15.
  • A recent Investec survey has found that institutional investors plan to target a mixture of private rented sector (PRS), student and retirement living subsectors in their portfolios. 91% of the survey respondents believed a blended investment approach will become common within five years. Many also noted that it is now easier to invest in a range of submarkets and see many subsectors as complementary.
  • Tory peer Lord Bethell has suggested that buyers of new homes should be able to retain up to 10% of the purchase price so that housebuilders are compelled to carry out repair work. He said retentions of 5-10% would act as:

"a great big industry-sized nudge for homebuilders to embrace modern and more reliable methods of production that deliver the sorts of homes that do not need endless tweaks and costly, irritating snagging to get right"


  • UK consumer price inflation (CPI) remained stable in March as slowing food and video game prices offset rising fuel and clothing costs. CPI remained at 1.9% - below City of London economists’ expectations of 2%. With average weekly pay rising at a rate of 3.5% in the year to February 2019, household finances have seen a boost.
  • The UK Government will inject £200m into a state-run scheme designed to provide financing for business amid concerns over a reduction in funding from the EU after Brexit.
  • UK Chancellor Philip Hammond was recently in Beijing trying to secure contracts for British companies seeking to provide either finance or engineering expertise under China’s Belt and Road Initiative – a project attempting to rebuild and expand the old Silk Road between Europe and China.
  • UK public borrowing hit a 17-year low during the past financial year. The Government spent £24.7bn more than it received between April 2018 and March 2019, down from £41.8bn during the 2017-18 financial year. It was the lowest annual borrowing since 2001-02.


  • According to a flash estimate from Eurostat, the Eurozone economy picked up in Q1 2019 with GDP growth accelerating to 0.4% (up from 0.2% in Q1 2018). Growth was buoyed by higher net exports, raising economists’ hopes that the period of rapid slowdown may be over.
  • US consumer spending picked up in March with personal spending rising 0.9% on a month-on-month basis but inflation remains sluggish and well below the Fed’s 2% target. The figures suggest that American consumers are continuing to spend despite uncertain global economic outlook.
  • According to an initial reading from the commerce department, US GDP grew at an annualised pace of 3.2% during the first three months of 2019, exceeding Wall Street predictions of 2.3% growth and quelling fears of an imminent US recession.
  • China has released a series of positive economic data, suggesting that the economy may have passed the worst of its recent slowdown. Real estate and fixed asset investment grew, as did industrial output. Interestingly, in March alone, China produced 180m tonnes of cement – a 22% increase over March 2018 and twice the amount produced by the US in the whole of last year.
  • A paper published by the European Central Bank (ECB) concluded that an escalation on global trade tensions would hurt the US more than its economic rivals. For example, if President Donald Trump’s administration was to raise tariff barriers (or other barriers) on imports by 10% - and other countries were to retaliate – growth would drop more sharply in the US than in either the Eurozone or China.


  • Crude oil hit a five-month high on 24th April to $74.57 a barrel after reports that the US will stop giving sanction waivers to countries that import Iranian crude. Brent crude has subsequently declined after US President Donald Trump said he told OPEC to take action to bring down fuel costs.
  • China’s largest steel producer, Baoshan Iron and Steel Co, has been hit by slowing demand and higher costs, causing a plunge in its profits. The possibility of output exceeding domestic demand in China, which accounts for half of global steel production, raises the prospect of the country once again using exports as a pressure valve, flooding international markets with excess steel and suppressing prices and profit margins for producers elsewhere.
  • Glencore has cut its full-year copper output goal by approximately 3% in a recent production report. The company had a weak start to the year, reporting that in Q1 2019 output for the metal was down by 7% from the same period a year ago. The reduction in output was blamed on various issues, including flooding in Australia, safety-related stoppages and smelter outages.


  • A new £173m closed-end fund has been launched by Resolution Property to target core plus (ie low to moderate risk) real estate in the UK in a sign that some are still keen to buy UK property. Robert Laurence, co-founder and Chief Executive of Resolution, said that the slowdown in London’s capital markets due to Brexit was “presenting a few opportunities”.
  • Chief executive of Crossrail Mark Wild has said that the company has earmarked a six month delivery window for the £17.8bn scheme “with a midpoint at the end of 2020”. This means that the central section will open at some point between October 2020 and March 2021.
  • Israeli billionaire Teddy Sagi has launched a new venture called LABS Enterprise which will aim to provide flexible workspace for businesses with more than 50 employees. Dotan Weiner, chief operating officer at LABS, noted that it was seeing more companies looking to grow and take a long lease, but with a full-service offering. It is forecast that by the end of 2019, 40% of demand for flexible office space will come from large companies.
  • European Land’s 42-storey ’cucumber tower’ has been approved by Westminster City Council’s planning committee. Consent covers two towers (42 and 21 storeys) at 1 and 6 Merchant Square, W2. The tower at 1 Merchant Square will be the tallest residential tower in the West End.
  • Kier and BAM Nuttall are among winners on the £2.6bn Environment Agency (EA) framework. The EA’s capital investment programme will see England divided into five regions with each region assigned one or more suppliers. The programme of works will aim to protect 300,000 homes from coastal erosion and flooding.
  • In a recent trading update, housebuilder Taylor Wimpey said that it’s expecting building costs to rise by 5% in 2019. The higher costs are a result of the rising cost of materials, driven by a combination of underlying cumulative inflation and the exchange rates’ impact on the cost base of suppliers. It said that the increase in costs would also mean that its margins would be “slightly lower” than expected in 2019.
  • Skanska has told investors that revenues across the group have dipped by 5% (to £2.9bn) with profit dropping 30% (to £29m) in Q1 2019 compared to a year earlier. Its European construction arm continues to stay in the red but losses have narrowed compared to last year.

If you have any questions or have some news/information to contribute to the bulletin, please contact Michael Urie, or Nick Rowe

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