It’s offsite manufacturing’s time to shine in delivering alternative asset classes
In property, the term alternative asset class is used to describe less traditional investment options.
It can be a very broad term, but for residential it generally encompasses assets such as build to rent (BTR) and retirement housing.
Student accommodation and hotels also fall under its umbrella.
While hotels are of course nothing new, the rise of BTR and senior living, which are similar in that they provide 24/7 onsite management teams and a range of amenities, have been making headlines in recent years due to their explosive growth.
It’s only in the last few years that we have started to see major institutional investment into the BTR market. Grainger, the UK’s biggest landlord, now has a pipeline which consists of 24 schemes – totalling over 9,000 homes built exclusively for rent.
According to Savills, suburban BTR schemes are also beginning to take off – a trend which is likely to be accelerated by Covid-19 as renters increasingly make the move away from city centres. The estate agency reckons there are around 90 schemes in suburban locations.
There’s a similar picture being painted in the senior living sector too. Investment company ReSI, which was acquired by Gresham House in March, has been building its portfolio of retirement housing, purchasing schemes from insurer Aviva, and Places for People, the housing association, who we secured a £100 million deal with last year.
So, what role can we, as offsite manufacturers, play in these rapidly growing sectors?
First is our ability to deliver schemes at pace.
For institutional investors, who are increasingly investing in long-term income-producing assets such as BTR, they generally want to deliver as many rental homes as they can in a short space of time. This is in order to maximise revenue (which comes in the form of rental payments) and access it faster.
Secondly, we’re able to deliver highly energy-efficient homes. Up to 50 percent more efficient than traditionally constructed new builds, in fact. This is incredibly important for the senior living sector.
The energy-efficiencies that our homes can achieve is down to our ability to significantly improve levels of airtightness. This helps keeps residents warm in the winter, and cool in the summer. For developers and operators of retirement communities, this is a huge selling point as it allows them to provide a product which focuses on the health and wellbeing of their residents.
Increased energy-efficiency also translates into huge savings on energy bills for elderly residents, with our homes able to run on as little as £1 a day. This will be particularly important going forward with interest rates at historic lows and pensions become tighter.
Lastly, and arguably our most important selling point, is quality.
Residents living in BTR and retirement housing accommodation often pay a premium for services and amenities such as a 24/7 onsite management team, cinemas, gyms, and weekly residential events. But, with a higher price comes an expectation of higher quality,
Our accredited systems can deliver homes that are of superior quality to those built traditionally as we can benchmark standards at numerous stages of the build cycle, helping to minimise defects. Therefore, by the time our schemes are delivered to site, they can be rest assured that their residents will be provided with spaces free of snagging issues.
Over the last decade or so, BTR and retirement housing developers have capitalised on long-term demographic trends of more people renting and living for longer. Now offsite manufacturing must step up to the plate by providing developers and investors with speedy, energy-efficient and high-quality solutions to building alternative asset classes.