At the Build to Rent Forum Scotland this week there was a feeling of positivity on the development of the sector in Scotland. The last year has seen a number of new high profile schemes announced. It is probably not surprising that given the dynamic nature of the BTR sector that no sooner have schemes started to get off the ground than the industry is already thinking about future direction. This was evident in the discussions in Glasgow this week. So what are the current hot topics and where do we see the sector developing?
Will we see a growing trend for modular/off-site construction, with a move towards a more standardised core product to increase speed of delivery and improve margins? The emergence of accreditation schemes such as BOPAS, the Buildoffsite Property Assurance Scheme, is seeking to provide comfort to purchasers, tenants and lenders on non-traditional construction methods. The BTR industry, with its modern outlook and desire to deliver housing more quickly than buy-to-sell, would seem like an obvious candidate to be an early adopter of innovative construction methods.
Choice of product
There is increasing recognition of the potential for more choice of product. Initial schemes focus was on the young professional market with amenities to match - including gyms and cinemas, but the industry is already broadening out from the Generation Rent sector. There is an appreciation that the industry can embrace various markets, each with its own requirements in terms of amenities and services. We have already seen demand driving different products, with certain schemes sacrificing income producing units to allow for increased amenity provision, whilst others have stripped back amenities in a bid to offer a more affordable product. BTR could play a significant role in meeting the affordable housing need in Scotland, so it would seem sensible to permit a degree of sacrifice of amenity or services to allow delivery at midmarket rental level.
New subclasses which have emerged in the rest of the UK look well placed to debut in Scotland in the near future, with Co-Living and Retirement Living already the subject of considerable excitement. Bringing the build quality and freshness of BTR and combining this with the social element of communal living, while offering an exciting list of amenities and communal activities, Co-Living represents a genuine new direction for UK urban living.
The Retirement Living market has the advantage of catering to a demographic which is shifting ever more favourably in its direction. The opportunity for added value services would seem particularly strong here, given the wide range of potential services which could be offered to residents, from gyms through to assisted living, and the relative affluence of the target market having the means to pay for such services.
Reflective of the current wider trend for mixed use development, it may be that gains could be made in combining different aspects of BTR within the same larger scheme, with for example Co-living schemes sitting alongside mainstream BTR.
There are plenty of indicators that the pace of development and expansion of this vibrant sector is set to continue and become an established part of the Alternatives sector.
Read our full guide to Build to Rent in Scotland