By Marc Taylor, director at Tay Letting
THE introduction of Build to Rent (BTR) development to Glasgow this year has the potential to transform the housing market and reinvigorate the city centre as investors react to the changing attitudes of younger generations to home ownership.
An enduring narrative has played out in the media over the years that refuses to go away: millennials and younger people enjoy luxuries in life and must forego these for desirable accommodation.
An Australian millionaire property developer once told those struggling for deposits they will likely never own a home because they’re “spending $40 a day on smashed avocados and coffees and not working.” This tired logic was regurgitated last year when Strutt & Parker, an upmarket estate agent, suggested millennials could conquer the growing disparity between wages and deposit savings by taking packed lunches.
This argument is dated as views on home ownership evolve and the UK adopts a more European attitude. Millennials and Generation X focus on a progressive lifestyle, rather than being a home owner, as a barometer of success.
BTR refers to the emerging market in private rented residential stock, designed solely for renting rather than sale. The concept, which has proven popular in England and Europe, offers housing in prime, well-connected locations that would otherwise be unaffordable to consumers. Glasgow’s first significant BTR development – Candleriggs Court – arrives this summer and there are more than 3,000 units due to be delivered in the city over the next two years.
The catalyst is the continuing growth of Scotland’s booming property market. Last month, Zoopla’s Cities Index announced Glasgow property prices had risen by 5.7 per cent over the last year, and research indicates buying a house now costs five times the average salary compared to 3.5 times in 1990.
In response to increasing property prices, many millennials priced out of buying are instead consciously choosing to spend what they have, not make long-term investments, and follow the lead of many European countries by favouring rentals.
This comes at a time when the popularity for living in Glasgow, particularly amongst graduates and young professionals, has never been higher. Credit rating company, Totally Money, crowned Glasgow over 62 other cities in the UK as the best city for millennials after assessing several factors including the price of living, work opportunities and nightlife.
However, Glasgow’s centre is underpopulated and lacks the quality of accommodation necessary to facilitate this pent-up occupier demand, which adversely affects the city’s nigh- time economy. Anyone who has walked down Buchanan Street after 8pm through the week knows this rings true.
BTR can help meet the increasing demand for rental property in prime locations – and satisfy the needs of the city as it aligns with the council’s a plan to raise the number of people living in the city centre to 40,000 by 2030 through further regeneration.
It offers the convenience of city living, combined with a dynamic culture and bustling nightlife, but also represents a viable option for investors to redevelop neglected areas. Long-derelict sites that struggled to get funding for office or retail redevelopments can be unlocked and transformed through BTR.
The UK’s property investors see the sector as a huge growth area as BTR developments offer the opportunity to deliver thousands of units to market much quicker than traditional housing schemes, while tackling the country’s chronic lack of housing. Legal & General’s recent investment in a 324-apartment development in Glasgow’s Buchanan Wharf represented the first major BTR investment in the city – but will certainly not be the last.
Build to Rent is here and it’s going to change Glasgow for the better.
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