Recently, I met with Andrew Teacher, the founder of Blackstock Communications, and we sparked an interesting Market Mover-worthy discussion as to which metrics are the most important and interesting for PRS/BTR developers. Reducing voids as much as possible seemed to be an area of key importance, either through specific area selection or through choosing the right tenants.
It seems plausible to me that locations with higher numbers of ‘family age’ individuals (who typically have relatively high incomes) and where rental properties are in high demand are likely to be the most inviting combination for prospective developers. Age is a defining factor because these individuals are less likely to move house and, with high incomes from professional jobs, they can likely afford the premium on a BTR new build. Subsequent high demand in these areas can then be measured by a low number of days on market for rentals.
Using the new REalyse Scout interface, I ran a search across the UK for areas where rented flats took between 9 and 30 days to let. Carefully chosen because below 9 days might bring up anomalous low volume locations, while above a month is simply too long to be considered a high demand area. I also looked for areas of middle-ranging income (salaries between £3,000 and £4,300 per month), with a relatively large population of 35-50 year olds – the kind of detailed demographics that Scout helps to search for.
Two distinct clusters and one outlier became apparent. The top left cluster were the places in London you would naturally expect: Wandsworth; Wimbeldon; Battersea in the far top left; Putney and Kensington near the edge of the blue correlation line. In the second cluster on the right were the places that may come as a surprise: East Dulwich; Boveney; Blackheath; and, Upminster. This second group may well become interesting locations for BTR developers, particularly before the best locations and prime pieces of land are snapped up.
However, the big outlier was off on its own to the left of the graph. This area has the lowest time on market, with flats being on the market for only two weeks on average. It also has a large number of 35-50 year olds residing in the area, mostly on a relatively high level of income.
So, where is this panacea? Balham.
It is also worth noting that while rents for semi-detached, terraced and detached properties here have increased by 19% over the past two years, rental prices for flats have not changed at all.
Definitely an opportunity to look at. And, judging from the number of planning applications in the area, not many companies are looking here just yet – a prime chance for someone to be the first.
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