A record breaking year for the PRS market?

The world of institutional investment into UK property is a world away from regular landlords expanding their portfolios but it is worth monitoring because it often reflects wider international sentiment about the buy to let market.

A record breaking year for the PRS market?

Following a slow start to the year which saw an approximate £200m invested in PRS schemes over Q1 2018, the news was far more encouraging in Q2. CBRE shows that the total value of investment in the second three months in the year soared to £907m and the overall number of investors targeting the market also increased notably.

The final quarter of 2017 set a record fractionally higher than Q2 2018 but the difference is inconsequential and the total was reached following a far stronger Q3 2017.

Significant deals in the quarter included a £300m joint venture between Universities Superannuation Scheme and Places for People, and a £200m transaction agreed by M&G Real Estate to fund the building of new homes.

The data from CBRE confirms that deals like this give 2018 the potential to be a record breaking year with £1.15bn already invested and a further £1.15bn worth of deals under offer. In addition, the volume of institutional equity targeting the UK PRS increased slightly during the second quarter, up to £32.7bn. 2019 could well have a lot to live up to.

The CBRE report says that “appetite remains strong, with many international developers circling the market and indicating a preference for direct land purchases.”

Regarding the origin of all this investment, the USA accounts for almost a third of the total and the Middle East and Europe have also invested significant sums – and that is not to mention that inward investment from UK firms makes up a quarter of the total.

Whilst large-scale investments like this do not directly affect the day-to-day lives of small investors or ‘accidental landlords’, the larger market trends do help to shape the overall outlook. In a time when many stories take for granted that confidence in buy to let property investment is on the wane, it is encouraging for investors to see that the big players appear to not only have unwavering faith in the market, they are actually increasing their investment to record levels.

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Sheffield Guide vertical - April 2019

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