Build to Rent – What Lenders, Investors and Valuers need to think about:
We hope you have had a great weekend filled with sunshine, laughter and goooooals! This week we focus on the Build to Rent sector and the role that technology can play. Read on to get insights from leading investors from PfP Capital, LGIM Real Assets, Dolphin Living, & Natwest RBS.
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Innovation in the Build to Rent Sector Panel Discussion at FPT 2018
Our all star panel covers some very interesting topics and gives a great overview of Build to Rent. Here are a few of the areas covered:
Innovation within Build to Rent
Innovation in Delivery and Operations
Tech Solutions that these investors are currently using
What PropTech solutions they are looking for in the future
Here are the Key Takeaways from this panel:
Host: Alexandra Notay – Build to Rent Fund Director at PfP Capital
1. Chiara Zuccon – Head of PRS Natwest RBS
2. Emma Long – Head of Corporate Strategy LGIM
3. Olivia Harris – Chief Executive Dolphin Living
To start – it is important that we all know the difference between B2R and PRS
PRS – Private Rental Sector: This covers any building which can be rented.
B2R – Build to Rent: Purpose built for renting to be owned by one landlord. In the USA – this is known as 'multi-family'
Takeaway 1: Build to Rent or B2R is an emerging asset class within a wider PRS. It is still very much in it's infancy. There are lots of new use-cases – the newest being co-living. (1.40 mins in)
Takeaway 2: Affordable B2R developers are trying to solve the housing crisis by implementing 'personalised rents' where both household incomes and household composition are taken into account. They are working to try to avoid 'Rental Poverty'. (4 mins in)
Takeaway 3: This new model is designed for tenants to 'choose' renting rather than 'having' to rent. Occupants need to feel an emotional connection to these buildings and environments in order to ensure long term rentals. Future-proofing is essential to ensure that these tenants are going to stay put. (5.40 mins in)
Takeaway 4: Customer focus is now changing the value of property. Like any customer, attraction and retention is vital. Developers now have to think more about the tenant 'experience'. Landlords need to think about convenience, efficiency, security, and community. It is MUCH harder for lenders, investors and valuers to put a value on this experience. (especially when they have not yet been built. There are also not many comparable models at this stage.) (8.33 mins in)
Takeaway 5: It is important for people -nation wide – to understand that this offering is available. Most people are not yet familiar with the term Build to Rent. Consumers need to see the possibilities and proven cases in order for this type of model to become mainstream. (10.40 mins in)
Takeaway 6: This model needs to retain the human element, with staff and property managers becoming the 'faces' of these new communities. The staff need to create the identity of the building. Tech solutions help, but the human element is crucial. (15 mins in)
Takeaway 7: Build to Rent developers have a genuine interest in the lifetime of their buildings. They will put in alot more work if they are going to be maintaining these buildings over a long period of time! They will want to keep their maintanance costs as low as possible and make all of their M&E and Fabric jobs as preventative as possible. Big firms can REALLY benefit by making long term decisions on asset maintenance. instead of putting in cheap equipment for a quick sale, they can get better, longer lasting equipment which they can monitor closely.
B2R allows for great planning and incredible cost savings. (20.30 mins in)
Takeaway 8: Developers are having to think long term and look at the housing demands. Things like the ageing population are having to be considered. If people are renting for life, healthcare, mobility and security are big issues which need to be thought about. Developers need to be flexible so that they can evolve and adapt to needs. (12 mins in)
Takeaway 9: B2R is here to stay. In the UK alone, 20,000 buildings have been built and are now being lived in. There are 80,000 more to come. B2R increases standards and improves people's quality of life. (24 mins in)
Takeaway 10: When implementing tech solutions and smart home technology into these types of buildings, data is tricky. It is very important that tenant data is carefully dealt with and used for the right purposes. (26 mins in)
Want more information on housing trends?
Here is the 'Housing Sector Survey' 2018 -Savills
Our partners at EG are hosting their first ever tech awards show. The night with the brightest stars in tech & real estate! An electrifying evening simply not to be missed! Hope to see many of you there. Congrats to all of the finalists!
Next week we will be focusing on how institutional investors are leveraging PropTech int he commercial sector.