Up to 4,500 flats planned for the centre of Reading could potentially become Build-to-Rent (BTR) homes.
Speaking to guests at a Thames Tap round table event, Steve Woodford and Mike Shearn, managing director and chief operating officer respectively for Haslams Estate Agent, reported ‘an absolute lack of supply’ of new homes.
Institutions, they said, were in the market, driving the numbers of BTR units among those already being delivered in, as well as those planned for, the town centre.
Mr Woodford told the meeting, which was hosted by Haslams: “We track the data on the planning applications and we reckon there’s anything up to 4,500 units that could go down that route.”
He added: “I think there’s too many. We’ve gone from zero. I don’t think that Reading can sustain 4,500-plus Build-to-Rent units, personally. There might be a tipping point and a few people will be holding a rather large parcel.”
Phil Brown, head of Savills Reading, said: “We can see the pipeline and I think it depends on the phasing of delivery because that will have an impact.”
Mr Shearn told the January 27 meeting: “Every crane in Reading is Build-to-Rent. There’s a real opportunity if you’re a developer with apartments to sell in Reading. You would have the market to yourself for probably the next two years, maybe longer.”
They said the trend meant a reduced number of homes for sale.
Mr Shearn reported that Reading’s first BTR scheme, Thames Quarter, is achieving £30 psf whereas the comparable monthly figure for the private rented sector is £25. The level of amenity provided, he said, is key.
He said: “We get a lot of Build-to-Rent clients come to us and say, ‘what are we going to get?’. We say, this is what the market rent is, you need to come up with your service proposition because that is what people are going to be paying for, over and above the market.
“Thames Quarter is the upper end, your executives, but it’s more akin to the hotel experience. You sleep in your room but you’re not in your room very much. You use the facilities in the block.
“Red carpet rental is what we call it. Your service levels are really high but it’s about what those additional services are.
“In some Build-to-Rent schemes in London and Manchester, you’ve got standard things like a cinema but you might have treatment rooms, swimming pool, gym.”
UK Property Forums managing director Matthew Battle suggested a mindset change between generations.
Mr Shearn added: “It’s not a mindset change for some people though, they don’t own anything. They don’t own houses, they don’t own cars. There’s a whole generation out there that don’t own anything, they just lease it. For certain age groups I don’t think they’ve got a choice.”
The meeting heard demand for ever increasing levels of service is now driving competition among institutions and their overheads are having to increase.
Mr Shearn added: “Two years ago Build-to-Rent operators were saying ‘we need a minimum of 100 units’.
“Now that’s way too small. Each scheme needs a general manager and a community engagement manager because it’s all about events and that sort of thing. The fixed overhead on that is a lot so they need at least 200 to make it work now.”
New home sales are now outstripping supply and driving up prices with £500,000 the average price of a new home.
Mr Woodford said: “The developers are so far forward sold that some of them have sold as far as September this year, so effectively they have done their target for the year. All they’ve got to do is build it .
“That’s another problem in terms of being able to deliver it. Material costs have gone through the roof so it’s an interesting dynamic.”
Haslams reports demand from British nationals in Hong Kong, seeking to come to the UK, another factor driving demand and prices.
Two Berkshire schemes, Huntley Wharf in Reading where stock has been forward sold up to 2024, and the Horlicks site in Slough are a big draw for the Hong Kong exiles.
Mr Shearn added: “Horlicks is sold hugely internationally and so is Huntley but it’s all Hong Kong and the price point is quite nice at £350-450,000.”
The Thames Valley was compared to areas to the south of the region. Brian Dowling, partner at Boyes Turner, previously worked around Winchester where he is based. He reported fewer constraints in the Thames Valley compared to Winchester.
He said: “The national park (New Forest) completely stops development, then nitrate and phosphate neutrality came in and stopped everything over 300 units going ahead until they found workarounds, like taking arable land out of production and growing trees on it. Seems crazy to me but we have got fewer of those constraints here and more willingness to develop.”
The line up (l-r in image)
Steve Woodford, managing director, Haslams
Mike Shearn, chief operations officer, Haslams
Charles Bushe, director, DevComms
Laura Fitzgerald, director, mode Transport
Joanne Bruce, marketing manager, Evans Jones
Matthew Battle, managing director, UK Property Forums
Brian Dowling, partner, Boyes Turner
David Jones, managing director, Evans Jones
Phil Brown, head of office, Savills Reading
Jo Jackson, director Thames Valley, SEGRO
© Thames Tap (powered by ukpropertyforums.com).
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