Harnessing Institutional Capital to Deliver Housing for Future Talent

Although residential real estate is the world's largest asset class by value, dwarfing commercial estate by some margin, residential is still considered an alternative asset class within the property world.

21 Feb 2022 Richard Jackson, Managing Director, Present Made

This is despite houses predating both modern offices and shops by millennia, and having somewhere to live is a fundamental human need.

That said, COVID-19 may have finally moved residential from alternative to mainstream. Despite the global pandemic, house prices rose significantly in pretty much every major economy, while many residential tenants proved better rent payers than a lot of commercial occupiers.

Investor interest in specialised forms of residential such as build-to-rent and student accommodation was growing before coronavirus. Attractive demand/supply dynamics combined with the promise of liability matching income streams that have defensive, counter-cyclical qualities saw institutional investors such as pension funds and insurers making big plays in both sectors.

Investor interest in the living sectors will only grow.

COVID-19 revealed the vulnerability of mainstream property investments such as offices and shopping centers, and likely accelerated the long term trends that were inevitably going to challenge them. In sum: lockdown made most people realise they can work or shop from anywhere.

COVID-19 also shone a spotlight on life sciences, with AstraZeneca and Pfizer now both household names thanks to their vaccine success. While pharmaceutical firms like these require highly specialised buildings typically backed up by a strong operating platform, that hasn't stopped heavyweights such as British Land looking to enter life sciences real estate.

The Oxford Cambridge Arc is the undisputed heart of the UK life sciences industry. Bookended with two world class universities, the region hosts an interconnecting set of innovation ecosystems that have given us ground-breaking research and life-saving treatments, including a COVID-19 vaccine

Life sciences real estate investors often talk about the triple helix of government, academia and the private sector which is necessary for a life sciences ecosystem to emerge and flourish. What all three need is talent, but whether it is Cambridge, Oxford or San Diego, the talent cannot often afford to live where the opportunities are. This is where institutionally funded housing comes in.

Yet despite substantial demand, there are very few, if any, purpose-built and designed family homes for rent in the region.

By creating a high-quality rental housing option that taps into consumer demands for healthy and sustainable living, we can help the Arc capture and retain talent. Present Made homes will be well designed, accessibly priced and sit within masterplanned communities that come with a host of onsite resident amenities and services all focused on boosting mental and physical wellbeing.

Crucially, rather than acquiring existing stock, we are adding to a scarce supply of housing. Our decision to use modern methods of construction also means the homes can be delivered faster in a process that is less wasteful and disruptive compared to traditional construction. Precision engineered homes typically come with fewer defects and are more energy efficient than your typical new build.