Nearly three-quarters (71%) of professional property investors plan to invest in Build to Rent developments, according to Handelsbanken's fifth annual Property Investor Report, even as the number of new BTR homes starting construction has fallen sharply.
The research, based on a survey of 200 real estate investors, property management professionals and landlords, points to broad appetite across the residential rental market rather than concentration in any single asset type.
Almost two-thirds (63%) plan to increase their exposure to houses over the next 12 months, 59% intend to increase exposure to flats, and 48% to HMOs. Student housing is also attracting attention, with 44% planning to grow their exposure over the same period.
Strong rental demand is helping to drive that expansion. Among investors planning to increase their overall property holdings, 58% cite it as one of the reasons behind their growth plans.
Build to Rent stands out within the findings. The research does not specify how investors intend to gain exposure to the sector, but the level of interest suggests purpose-built rental housing is becoming a more significant component of how professional investors approach residential property.
"Professional investors are looking across a much broader range of rental housing than the traditional buy-to-let model alone," said James Sproule, UK chief economist at Handelsbanken.
"Build to Rent is particularly striking in our findings, but there is also significant appetite for houses, flats and HMOs. That suggests investors are thinking carefully about where rental demand is coming from and which types of property are best placed to meet it.
"Strong rental demand remains an important part of the investment case. For professional investors, the question is increasingly not simply whether they want exposure to residential property, but which type of rental housing offers the right opportunity in a particular market. That is likely to mean greater variety in how investors build their portfolios, with traditional rental property sitting alongside newer and more specialised forms of housing."
Traditional houses remain the most widely favoured sector for increased exposure. However, the figures also point to substantial demand for other forms of rental accommodation, with nearly six in ten investors planning to increase their exposure to flats and close to half intending to grow their HMO holdings.
Taken together, the findings suggest professional investors are positioning across different parts of the rental market, from individual houses and flats through to shared accommodation, student housing and Build to Rent.
That breadth may become increasingly relevant as investors respond to varying tenant demand across local markets. Houses may remain attractive in family and suburban locations, while flats, HMOs and purpose-built rental developments offer exposure to different tenant groups and geographies.
Sproule added: "There is no single rental market. Demand can look very different depending on location, property type and the needs of tenants, and professional investors recognise that. The breadth of investment intentions in our research suggests investors are looking to build portfolios that can respond to those differences. Build to Rent is an important part of that story, but it sits alongside continued demand for more traditional residential property.
"For investors, understanding local demand and selecting the right type of property will remain critical. The opportunity may look very different from one town or city to another, which makes local market knowledge and a clear investment strategy increasingly important.
"No doubt next year's Property Investor Report will reveal whether our investors are changing tack and if so, where the new opportunities could be."
