U.S. builders muscle into booming U.K. rental-housing market
U.S. developers are moving into the U.K.'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 pounds ($260 million) a year, rising to 380 million pounds 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 U.K., and is now expanding into other types of rental housing. It has about $13 billion in real estate assets globally.
"The U.K. 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 700 million euros ($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 U.S. Greystar Real Estate Partners, based in Charleston, S.C., partnered with Goldman Sachs Group Inc. to run IQ Student Accommodation, the U.K.'s second-biggest purpose-built student housing firm, whose portfolio is up for sale.
In the U.S., 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 U.S., you have 60 beds, Matta said. "If you look at the U.K., for every 100 students you have 30 beds," he said.
The U.K. market is growing rapidly, adding 15% 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.