UK Residential Real Estate

Invesco UK Residential Strategy

With the UK’s expanding population, too few new homes being built and owner-occupation becoming less affordable, there is a need for institutional quality accommodation for today’s modern renters. Our strategy seeks to address these fundamental market concerns and offers institutional investors the potential for long-term income generation.

At a glance

Along with its identifiable and reliable income characteristics, the private rented sector (PRS) or ‘Build to Rent’ can potentially enhance long-term portfolio diversification through its expected low correlation with UK equities, gilts and commercial real estate.

Instant diversifier

Our strategy can potentially enhance long-term portfolio diversification due to its low correlation to other asset classes, such as, UK equities, gilts and commercial real estate.

Increasing supply /demand imbalance

The UK has a relatively fast-growing population. We aim to take advantage of the long-term housing supply and demand imbalance that this creates.

Excellent reputation

By having a strong reputation and an experienced team, we are able to access a stable, long-term pipeline – an important differentiator in the sector.

Goals

The strategy provides access to investment opportunities in the private rented sector (PRS) in Greater London and core regional UK cities, pursuing a strong pipeline of potential residential opportunities. The demand and supply housing imbalance in the UK could lead to positive outperformance and an opportunity for institutional investment. Aim is a net distribution yield of 3.5-4% and a net internal rate of return of 7-8%. Please note there is no guarantee the target will be achieved.

Investment process

With the UK forecast to be one of the fastest growing populations in the European Union this decade, together with its well-publicised deficit in dwelling stock, we believe the PRS continues to offer attractive opportunities.

The Invesco Real Estate team’s investment approach focuses on large-scale, high quality opportunities in recognised locations within proven letting markets. These aspects are constantly monitored by the research team.

The team works directly with contractors and developers. However, having a strong reputation, an experienced team and a strong track record allows them to source opportunities, which they believe can be an important differentiator in the sector.

In addition, ESG considerations are fully integrated, from acquisition planning and development to ongoing property management.

Steps

  • Identify sites with full planning and underwrite pipeline.
  • Investment. Manage equity. Structure and manage debt
  • Active management and creating additional NOI[1]. Lease and stabilise assets.

Why Invesco

With 571 staff located in 21 offices globally. Invesco Real Estate is responsible for assets of around 71.1 EUR Bn and are focused on enhancing the investment outcomes we deliver to our clients. In addition:

  • Invesco has global residential expertise with over 22 EUR Bn transacted across 481 assets in the US, Asia Pacific and Europe.
  • We have dedicated residential expertise in Europe with over 30 years’ experience.
  • Invesco has a clear residential strategy with a credible pipeline of investment opportunities.
  • We are one of the top investors in the UK private rented sector.

Investment team

The team works directly with contractors and developers. However, having a strong reputation, an experienced team and a strong track record allows them to source addition, off-market opportunities, which they believe can be an important differentiator in the sector.

The team has a deep understanding of the UK residential market and has established relationships with which to source the best opportunities to deliver attractive returns.

Investment risks

  • The value of investments and any income will fluctuate (this may partly be the result of exchange-rate fluctuations) and investors may not get back the full amount invested. Invesco Real Estate - UK Residential Strategy: Property and land can be difficult to sell, so investors may not be able to sell such investments when they want to. The value of property is generally a matter of an independent valuer’s opinion and may not be realised.

Important Information

  • This website is for Professional Clients & Qualified Investors only. Data as at 30 June 2020, unless otherwise stated. By accepting this document, you consent to communicate with us in English, unless you inform us otherwise. Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.

    This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.

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