Investec’s second Future Living report looks at how the pandemic has underpinned the sector’s evolution with data gathered from global institutional investors representing over £500bn of AUM.

• The ‘beds for rent’ sector has emerged as a clear winner during Covid-19, far outpacing office, retail and hotels in prospects for the next 10 years
• Build-to-rent (BTR) has become core to investment strategies, with 60% of investors currently investing in the sector
• Retirement living has soared in popularity, with 33% of respondents currently investing in the sector, up from 20% in 2019
• More than 80% of respondents believe the outlook for the ‘beds for rent’ sector is more attractive outside of London

Covid-19 has transformed global institutional investors’ attitudes towards real estate sub sectors, with the ‘beds for rent’ categories emerging as clear winners, according to Investec Real Estate’s second Future Living report. Investment into the sector is set to grow significantly, as evidenced by the five-fold increase in the number of investors committing over £1bn to the sector over the next five years.
A defining feature of Covid-19 has been the unprecedented disruption to what were considered the traditional real estate sectors of office and retail. This is evidenced by the 85% of investors who expect to either increase or maintain their portfolio allocation towards the ‘beds for rent’ sector over the next 10 years, versus just 58% for office.

While the sector was becoming an increasingly prominent asset class before the pandemic, the defensive characteristics it has displayed during the last year have turbocharged its appeal. Relatively higher rates of both occupancy and rent collection, coupled with investors’ growing comfort level with exposure to operational real estate, have fundamentally changed how the sector is perceived.
The findings have been revealed in Beds for Rent: The Golden Age, a global survey of more than 52 global institutional investors representing £514 billion in assets under management, commissioned by Investec Real Estate, a leading UK provider of investment and development finance.

Mark Bladon, Head of Real Estate at Investec, comments: “When we launched our first Future Living report in 2019, it was based on the idea that a new real estate asset class was emerging in the United Kingdom that would hold a powerful appeal for global institutional investors. It’s encouraging to see the findings of our second report prove this assertion. Quite simply, the ‘beds for rent’ sectors are now core to investors’ strategies, as a combination of accelerated structural shifts, the fact that everyone needs a roof over their head and unprecedented disruption has reshaped the UK real estate market. As long-standing funders in the space, it is exciting to be at the heart of this evolution.

“As the United Kingdom’s recovery from Covid-19 picks up pace, we expect to see growing appetite for nationwide investment into the sector, with strategies encompassing student, BTR, serviced apartments and retirement living becoming increasingly common. We also expect to see a new set of operational metrics taking hold, with the winners identified for their thoughtful design, development, asset management capabilities and customer care.”

The report’s findings reveal that Brexit concerns have dissipated, with political uncertainty no longer seen as the biggest obstacle to the sector’s growth, falling from 72% in 2019 to 33% this year. Reflecting the increasing weight of capital seeking to access the space, unattractive pricing is now viewed as the biggest obstacle, whilst availability of stock saw the biggest increase up from 20% up to 40%.

Reflecting the growing maturity of the BTR sector, 71% of respondents said ‘beds for rent’ today can be viewed as two-tiered, with BTR and PBSA fully established versus the other asset classes.
Retirement living is viewed as the next sector most likely to establish itself fully in the UK, with 60% of respondents seeing the sector as particularly appealing from an investment perspective over the next five years, up from 35% in the first Future Living report, and 69% over the next 10. For investors surveyed, retirement living is now the most appealing of the ‘beds for rent’ sectors, significantly ahead of the well-established BTR and PBSA sectors.

Whilst purpose built student accommodation has become more appealing to investors, with 40% currently investing compared with 33% in 2019, current uncertainty is impacting on its longer term appeal, with optimism for the next five years for student accommodation (27%) almost halving since 2019 (48%).

The rise of ‘Living’ strategies has brought to the fore the ‘London-versus-the-regions’ debate, with more than 80% respondents believing the outlook for the ‘beds for rent’ sector is more attractive outside of London. One of the pandemic’s unanswered questions is whether urban centres, particularly London, can hold their appeal, with an answer unlikely to surface until more workers return to the office.

To view the full Future Living II report Beds for rent: The Golden Age, visit: