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Residential property investment topped £6billion in 2020, matching 2018’s record high

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Despite a difficult year for the commercial property market, UK residential investment volumes matched 2018’s all-time high, reaching £6.1billion in 2020 - £2.8bn of which targeted the London market.


While some commercial property sectors faced a hiatus in activity due to the uncertainty caused by the global pandemic, investment into residential property continued to increase, reaching 12 per cent of all commercial real estate investment in 2020, achieving yields of 4.4% in Q4 2020.

Some £3.5bn of the investment was placed in the growing Build-to-Rent (BTR) sector. By the end of the year the total BTR pipeline stood at 126,085 units, a 17 per cent increase on a year earlier.

Andrew White, Head of Residential at Colliers, said: “UK residential property is a solid investment option in the UK, particularly in the burgeoning Build-to-Rent sector as there is a perfect storm of a shortage of housing, and a huge affordability gap, especially for those who want to work and live in London. Over the last year the sector has grown 20 per cent and is going to continue to grow to meet the country’s housing needs.

“In addition to Build-to-Rent our cities, and in particular London, will always be attractive to overseas investors. Despite Brexit the UK is still a gateway location to Europe and America, providing access to a secure financial market and another currency to capitalise on.”

As well as investment properties, consumer residential sales performed well last year. Although the first UK lockdown prevented property viewings from taking place, the Chancellor’s announcement of a stamp duty holiday last spring helped to capitalise on the pent-up demand which appeared once restrictions were lifted. In Q4 2020 transaction figures reached 351,000, the second highest quarterly figure since the global financial crisis (behind Q1 2016 when it reached 387,000 ahead of second home stamp duty changes introduced in April that year). Also during Q4 2020 there were 307,000 mortgage approvals, with an average mortgage size of £211,119.

Oliver Kolodseike, deputy chief economist at Colliers said: “It’s no surprise that the stamp duty holiday has resulted in a rush in home buying as the upfront costs become more obtainable. With affordability ratios continuing to deteriorate as house price growth outperforms earnings growth, house buying is as difficult as ever, particularly in the south east, and any support brought in by the government is welcomed. The extension of the stamp duty holiday, albeit with staggered increases, until October is likely to mean that this level of activity will be sustained through most of 2021.

“It is also helping the buy-to-let landlords to grow their portfolios again. The last time residential activity reached those kind of levels was before the additional three-per cent levy for second homes was introduced in April 2016.”

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Andrew White

Head of UK Residential & International Properties Asia

Residential - Development

London - West End

Andrew heads up the UK Residential & International Properties (Asia) Department at Colliers and is a specialist advisor in residential and mixed use developments.  He has been involved in some of the largest and most complex sites within the U.K.

The Residential Department at Colliers comprises a market leading  team of  surveyors and advisers who focus on London, The South East and the Regions, advising  clients on their options for maximising value for their assets, including planning, development consultancy, Build To Rent, investment and disposal strategy and New Homes & Project marketing, both in the UK and Internationally.

Andrew has worked in the sector since 1994  having started his career with a large multinational real estate agency, then running his own land agency for 8 years before joining Colliers in 2013. He has advised government bodies such as the NHS, as well as family businesses, funds, charities, developers and companies on their strategy for disposal of their land holdings and property assets.

Clients include, Legal & General, the NHS, Royal London Asset Management, The Diocese of London, London Square, Telereal Trilium, Threadneedle, Aberdeen Standard, Greggs, Rexel and PSA Group as well as other large corporate landowners.

View expert

Oliver Kolodseike

Director of Economics and Research

Research and Forecasting

London - West End

Oliver is Head of Economic Research and leads the quarterly UK forecasting process including the publication of Colliers' Real Estate Investment Forecasts (REIF) report. He also  authors the monthly Property Snapshot and, quarterly Scotland Snapshot. Prior to joining Colliers, he worked for the Centre for Economics and Business Research and IHS Markit. Oliver holds a BA in Economics from  Georg-August University Göttingen (Germany) and an MSc in Economics from Exeter University.

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Kim Inam

PR Manager

Marketing & Communications

London - West End

I'm a communications professional who has previously worked as a journalist for eight years covering a broad range of topics including politics, crime, health and housing in north London. In recent years I have worked in corporate communications for local authorities across London  and joined Colliers in October 2019, initially providing maternity leave cover.

I provide strategic public relations advice to various business lines within the UK organisation to secure recognition for their work in the property press as well as key target media, and work with our experts to produce thought leadership pieces which are of interest to our clients and colleagues within the commercial real estate sector. In addition, alongside colleagues in the PR and wider communications team, I provide media and social media training for our in-house experts to prepare them for media opportunities and raise their personal brand within the sector.

As well as supporting various teams within the UK business, I also I curate and edit regular content for the Colliers.com blog, which drives credible business leads to our experts.

 

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