Strategy

UK residential real estate

M&G Real Estate’s investment approach hinges on delivering stable, long-term income returns driven by methodical evidence-based insight. We believe that investment in a portfolio of UK residential real estate focused on the private rented sector could achieve this aim.

Our UK residential property fund factsheet

Our UK residential property fund invests in a diversified portfolio of UK assets.

Our UK residential property fund factsheet
Meet our UK residential real estate team

Our residential property team is led by Alex Greaves who has over 15 years of experience in the market.

Meet the team
The housing shortage in the UK combined with continued, growing demand for quality rental homes offers a stable platform for rental growth. We believe that an opportunity exists to ‘professionalise’ the sector and offer new homes to the UK through institutional investment.

The case for institutional investment in UK PRS

Strong risk-adjusted returns
UK residential property has outperformed against gilts, equities and commercial property over the past 30 years, according to IPD (Investment Property Databank).

Diversification benefits
Low (or negative) correlations with equities and gilts. Correlation analysis suggests that residential could prove to be a strong portfolio diversifier for commercial property investors.

Defensive play
In the last two economic downturns, residential real estate dropped less steeply and recovered more quickly than commercial property.
People will always need somewhere to live and therefore during a downturn in the housing market/economy, the PRS can be expected to strengthen as uncertainty and other factors encourage people to rent rather than buy.

Backed by long-term supply and demand imbalances
The UK has an expected population growth of c. 230,000 pa in the medium term (2012-2021) – one of the highest rates in Europe.
The rising population in the UK has been accompanied by an increasing trend towards smaller, or single person households.
Housing construction has been on a downwards trend since the 1970s. At its highest level in the last 10 years this amounted to just 180,000 new homes and this is well below the level consistent with new demand.
First-time buyers face affordability challenges and the current lack of availability of mortgage finance is pushing ever-greater numbers of people into PRS.

Political support
All three major UK political parties have voiced support for PRS , reflecting a growing awareness of the importance of the sector and a greater requirement for professional landlords.
We believe there is a compelling investment case to bring institutional investors to a market that has largely been ignored for decades. Our track record in real estate will be a key factor in delivering a professional rental model that seeks to evolve successful rental regimes from other markets to generate strong income returns.