Goldman Sachs doubling down on UK residential property investment strategy

by Jonathan Adams
Goldman Sachs

The U.S. banking giant Goldman Sachs is stepping up its UK-based residential property investment strategy. The build-to-rent residential sector has attracted a number of wealthy international institutional investors keen on exposure to the UK’s strong and stable residential property market. Wall Street giants Goldman Sachs are among the most enthusiastic investors in the sector.

Earlier this year Goldman Sachs acquired a portfolio of 918 residential properties based in the northwest of England at a cost estimated to be around £150 million. The bank has now reportedly agreed to another UK build-to-rent residential property investment of around £200 million. It will buy 700 family homes from the residential developer Urban & Civic, which specialises in large-scale developments.

The deal will see Urban & Civic, whose business model is focused on the development of brownfield sites that require investment in infrastructure and securing planning permission. It then strikes profit-sharing deals with housebuilders to develop serviced plots. The company was acquired and taken private by the Wellcome Trust last November.

In the case of the deal with Goldman, Urban & Civic will also manage the construction phase which will be carried out by a contractor and completed homes passed on to the bank. The first 149 of the 700 homes to be built for Goldman Sachs will be part of a development U&C is working on as a joint venture with Aviva Investors near Rugby in Warwickshire.

Chris Semones, managing director of Goldman Sachs Asset Management’s  comments on the news:

“We believe that high-quality new rental homes are an undersupplied segment in the UK housing market”.

Urban & Civic concurred with that simple logic with:

“We see single family housing for market rent as an important part of the mix of tenures that will give people choice and access to our developments.”

The straightforward equation that has attracted Goldman Sachs to UK residential property investment as an asset class has also led other companies including John Lewis, best known as a retailer, to outline a build-to-rent investment strategy. The company will build a planned 10,000 rental homes on land it owns over the next ten years.

Property consults Savills estimates a total of 14,000 build-to-rent residential properties were completed in 2020, representing a 100% growth on numbers built over 2017. The company believes the current number could have doubled again, to almost 30,000, by 2026. It comments:

“The only part of the private housebuilding market that we expect to be appreciably larger in 2026 compared with 2020 is build-to-rent”.

This article is for information purposes only.
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