BLOGS

A joint venture that signals more than one deal

Watkin Jones's tie-up with HGP to advance a student accommodation and build-to-rent scheme in east London is, on the surface, a single transaction. But it lands at a moment when institutional appetite for purpose-built rental product in the capital's eastern boroughs is becoming harder to ignore.

City-centre residential development has spent the past two years navigating higher construction costs, cautious debt markets and a planning system under pressure. That this joint venture is proceeding regardless suggests financiers are still willing to back schemes where three things line up: demonstrable rental demand, a planning environment that says yes often enough, and a borough with room to absorb new supply without cannibalising existing stock.

East London, and Tower Hamlets and Newham in particular, currently ticks those boxes more convincingly than most of inner London.

The pipeline is already substantial

REalyse planning data across Tower Hamlets, Newham, Hackney and Waltham Forest shows a residential pipeline running into the tens of thousands of units over the past three years, with Tower Hamlets alone carrying over 12,000 granted units in general residential schemes — the single largest concentration among the four boroughs.

Student accommodation is a notable feature of that pipeline rather than a footnote. Newham has around 4,600 granted student bed spaces across a small number of large schemes, while Tower Hamlets has a further 1,150 granted and over 2,600 units still working through the system. That concentration of scale in relatively few applications is typical of purpose-built student accommodation (PBSA), where operators favour fewer, larger sites over incremental delivery.

Build-to-rent shows a similar pattern of concentration. Tower Hamlets has around 2,300 BTR units in progress and just over 1,000 already granted, with a meaningful share explicitly flagged as BTR units rather than general residential. Newham and Hackney each have several hundred units moving through the system too. It's a smaller slice of the overall pipeline than mainstream residential, but it's the segment growing fastest in investor conversations — and the one this joint venture sits squarely within.

Why granted doesn't always mean built

Not every scheme with consent converts into delivery, and Newham's 121 refused applications for general residential schemes over the same period — against 103 granted — is a reminder that planning risk hasn't disappeared. Refusal rates on BTR and student schemes are lower across all four boroughs, which is consistent with local authorities generally taking a more favourable view of purpose-built rental product than of speculative general residential, particularly where affordable housing contributions or nomination agreements with local universities are part of the offer.

Demand fundamentals are doing the heavy lifting

Planning consent only matters if the rental market can absorb the new supply, and the data here is supportive. Average asking rents for flats across east London postcodes have risen from around £2,340 a month in 2024 to roughly £2,390 so far in 2026, a gradual but consistent climb. Asking rent per square foot has moved from about £42 to £46 a year over the same period, a clearer signal of tightening supply-to-demand dynamics than headline rent alone.

Gross rental yields have compressed a little over the same window, from around 6.7% in 2024 to roughly 5.4% so far in 2026. That's the arithmetic of rising capital values and strong investor competition for stock rather than weakening rental income, and it's broadly consistent with what lenders and institutional buyers have been underwriting into BTR business plans across London more generally. For context, gross yields at that level remain well above the sub-4% territory seen in some prime central London postgrounds, which is part of what continues to draw institutional capital east.

Student accommodation demand in the area is underpinned by proximity to several major higher education campuses along the Thames corridor, a factor that PBSA operators weigh as heavily as headline rent growth when underwriting new stock.

Outlook: a market rewarding selectivity, not scale for its own sake

The Watkin Jones and HGP joint venture is best read as a case study rather than an outlier. Capital is still available for city-centre residential development, but it is increasingly selective, gravitating toward boroughs where planning committees have a track record of granting purpose-built rental schemes, where rental growth is verifiable rather than assumed, and where joint ventures can share both funding and execution risk.

For developers and lenders assessing similar opportunities, the practical takeaway is to look past headline pipeline totals and interrogate the mix: how much of a borough's granted pipeline is genuinely BTR or PBSA versus general residential, what the refusal pattern looks like for that specific use class, and whether rent and yield trends in the immediate catchment support the underwriting. On all three counts, east London's numbers currently make a reasonable case for continued investment.