BNP Paribas Real Estate, part of the BNP Paribas Group, has announced that the UK operational living sectors market could be worth an additional £470bn or more by 2029, if market forces align and supply shortfalls are addressed.
Based on the firm’s calculations of the current demand across student housing, Build to Rent, single-family rental and senior living sectors, it estimates the markets to be worth a combined £190bn or more today, with that figure set to more than double by 2029.
“Our latest analysis highlights the potential for significant growth across the UK’s operational living sectors. With the potential for the size of the market to more than double, it’s clear that alongside demographic shifts and urbanisation trends, it places an emphasis on the crucial role these sectors can play in addressing the housing crisis and supporting the living needs of the future.
“A few question marks have been placed over the future of the likes of Single Family Rental, Senior Living rental models, and Student Living as asset classes, however, this data shows that there’s reasons to be bullish with investment allocations.”
Rebecca Shafran, Alternative Markets Research, BNP Paribas Real Estate
These projected figures will only be achievable if supply shortfalls are addressed, which will be dependent on several ‘market force’ factors falling into place including supportive planning policies, development viability, data transparency, and improved sector liquidity.
“We’ve witnessed a significant increase in investors targeting the living sectors over the past six months, and the majority that I’m speaking to are all primed and ready to go and are eagerly awaiting the outcome of the budget. We also anticipate large portfolio transactions to be traded over the next 12 months which will be particularly interesting to watch in terms of pricing, yields, and volumes traded.
“In a living sector market with high investor demand and limited development supply, these asset classes provide resilient and strong returns.”
Andrew Screen, Head of Residential Capital Markets, BNP Paribas Real Estate
It comes as another BNP Paribas report found that the purpose-built student accommodation (PBSA) is still the ‘darling’ of the alternative sector.
There was £1.7bn of estimated investment into the PBSA sector in H1 2024 – 245% higher than in H1 2023. The PBSA sector stood out during a slow Q2 2024, where several large portfolio transactions boosted investment volumes.
