Housebuilder sells 150 homes in east London to M&G Real Estate for £63m, reflecting demand for rental properties
London housebuilder Telford Homes has sold almost a quarter of its homes to institutional investors for rent, as demand for “built for rent” developments rises.
The company sold The Pavilions in north London, with 156 homes, to housing association L&Q for £67m in February. Last week, it sold another development for rent – 150 homes in Carmen Street in east London – to fund manager M&G Real Estate for £63m.
The housebuilder said: “Over the last 12 months it has become clear that there is now effective institutional demand for high quality, well located developments to be ‘built for rent’.”
It added: “The sales to L&Q and M&G are just the start of the potential for PRS [private rented sector] to become a permanent and more significant part of the group’s sales mix.”
There is growing appetite among City institutions to invest in big rental schemes, which offer steady income. Demand for rented accommodation continues to rise, especially in London, as many people cannot afford to buy their own home.
Telford has joined developers such as Berkeley Homes and institutional investors in building blocks of rental homes, shaking up the private rental market, which has traditionally been dominated by individual buy-to-let landlords. Insurer Legal & General teamed up with a Dutch pension fund manager in January to construct 3,000 apartments for rent across the UK.
Telford remains heavily reliant on overseas investors, which accounted for 41% of its sales in the year to 31 March. The company sold 68 of 105 homes in the Liberty Building in east London, two thirds of which went to Chinese buyers, and the rest to UK investors, at an average price of £900 per square foot.
The Aim-listed housebuilder reported a 28% rise in pretax profits to £32.2m for 2015, with revenues climbing 42% to £245.6m. It raised its full-year dividend to 14.2p a share, from 11.1p.
Telford stressed that it was not affected by the decline in demand for high-end properties, and pointed to the “housing crisis in London and a clear imbalance between the supply of homes and the needs of a growing population”.
SOURCE: Guardian.co.uk
