Legal & General announces, on behalf of its Build to Rent Fund (BTR Fund) and Access Development Partnership (a joint venture between Legal & General Capital and PGGM), that it has agreed the funding of a £100 million development site at Hockley Mills, within the Jewellery Quarter Conservation Area in Birmingham town centre. Marking the 16th BTR site and second in Birmingham for the Legal & General BTR Fund, the Hockley Mills development takes its total investment in the sector to £2.1 billion.
15 Dec 2020
As Covid-19 drives secular changes and a fundamental rethink of many areas of the real estate sector, BTR has continued to deliver a stable income return throughout the crisis. The national lockdown, and subsequent social distancing measures, have had a significant impact on economic activity. For BTR, rent collection levels remain high with Knight Frank estimating that 95% of rent in the BTR sector was collected in Q2. Furthermore, many BTR assets - including the site at Hockley Mills - are well placed to benefit from some of the household behavioural trends and preferences emerging through the coronavirus pandemic; namely an increasing need for homes with functional space to work, alongside convenient access to local cultural and leisure amenities.
With a current population of 1.14 million, an increase of c.100, 000 people in the last 10 years, the population growth of Birmingham is the third fastest in the UK, behind London and Bristol. If this recent trend continues, the population of Birmingham is projected to grow to 1.18 million (3.9%) in 2028 and 1.23 million (7.8%) in 2038. These figures demonstrate an increased need for high quality housing.
Located centrally in one of the most sought after residential districts in the West Midlands and adjacent to both rail and tram links, the Hockley Mills site is on the periphery of the Jewellery Quarter providing a strong micro location for BTR accommodation. The scheme will deliver 395 apartments; one, two and three bedroom, alongside a new entrance to the Jewellery Quarter train station, 116 car parking spaces and 28,000 sq ft of flexible commercial space for retail, leisure and offices.
Legal & General was advised by global property consultancy Knight Frank.
Dan Batterton, Senior Fund Manager, BTR, LGIM Real Assets: "In the space of the last few years, the BTR sector has really come into its own. It has cemented its position in the UK as an asset class and successfully evolved away from the private rented sector. Showing its resilience and relative counter cyclical nature of the residential sector, BTR has remained largely unaffected throughout the coronavirus pandemic, as occupancy, rent collection and demand has remained high.
The Hockley Mills development further strengthens our existing portfolio, bringing our total number of schemes to 16 in eleven cities providing more than 5,300 apartments. The scheme will deliver high-quality, professionally-managed rental accommodation that can help to address the supply demand imbalance in Birmingham."
Hannah Badger, Associate in the Residential Capital Markets team at Knight Frank: "During periods of economic stress, residential assets are seen as extremely attractive by investors, in part due to both their resilience and counter-cyclical rental performance. Our view remains that, long term, the current Covid-19 crisis may well act as a catalyst for an acceleration of institutional capital into the UK’s residential investment sector.
Since March activity has remained strong as investors seek to increase their exposure in the UK market – indeed, recent Knight Frank research found that 77% of investors are looking to maintain or increase their investment plans in the near future. As the UK’s largest city outside of London, investment in Birmingham’s BTR market has always been strong. However thanks to the regeneration of the city centre and the upcoming HS2 line enabling even quicker links into the capital, demand by investors for high quality rental assets is certainly on the rise and is showing no signs of slowing down, despite the current wider market headwinds."
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which 39% is international. We have a unique and highly synergistic business model, which continues to drive strong returns. Legal & General provides powerful asset origination and management capabilities directly to clients, which also underpin our leading retirement and protection solutions. We are a leading international player in Pension Risk Transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Our purpose is to improve the lives of our customers and create value for our shareholders. Through inclusive capitalism, we are investing in long-term assets, such as real estate and infrastructure, that can help build a better society for the future.
*as at HY 2023
Legal & General Investment Management
LGIM is one of Europe’s largest asset managers and a major global investor, with total assets under management of £1.16 trillion1 ($1.47tn, €1.35tn, CHF 1.31tn). We work with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors.
For more than 50 years, we have built our business through understanding what matters most to our clients and transforming this insight into valuable, accessible investment products and solutions. We provide investment expertise across the full spectrum of asset classes including fixed income, equities, commercial property, and cash. Our capabilities range from index-tracking and active strategies to liquidity management and liability-based risk management solutions.
1 Data as at 30 June 2023. Data combines assets under management by LGIM in the UK, LGIMA in the US and LGIM Asia in Hong Kong.
Assets under management include securities and derivatives positions
*as at HY 2023