Investment in schemes in the private rented residential sector appears to be on the up; the government has increased its Build to Rent fund to £1bn and intent from major institutional investors, developers and
pension funds is said to be valued at around £7bn. The positive shift in view of investors towards developments focused on private sector rental accommodation has made this an increasingly attractive market.
Property company Viridis Real Estate is one such developer, commencing its first ever rental scheme on behalf of its client investors at Kenavon Drive in Reading. Russell Doughty, Buro Four’s Head of Mixed Use and Residential, talks to Viridis’ Robbie Pitman about the new focus and how project management differs in this specific part of the residential sector.
RD: So this is Viridis’ first scheme in the sector, what was the attraction?
RP: We have been looking closely at the private rented sector for some time. It is an emerging market where we see good growth potential. Demand has increased rapidly in recent years due to the lack of availability of mortgage finance and increased deposit requirements, forcing many first-time buyers into the sector, where there is a definite lack of good quality supply.
RD: How do you see the future of the sector?
RP: We believe the demand for rented accommodation will increase in the next few years. If we can respond with a superior offering, in terms of a complete living environment, then there is a very strong market there to be satisfied.
RD: So why start in Reading?
RP: Research has indicated strong demand for this type of development in Reading, with growth in the 20 24 year-old age bracket set to outstrip all others over the next ten years. Our target market of university graduates and young professionals is currently the largest demographic in the area. There is a good future pipeline of housing stock in the market, with a number of new residential schemes in Reading, but none have sought to target the long term rental market.
RD: What are the biggest differences in the delivery of this scheme compared to your developments in other sectors?
RP: A private residential lease scheme requires a strong focus on management and service provision for tenants compared to other sectors and there is a need to create a very strong sense of community. We want the experience to be head and shoulders above anything else in the area, which means making provision for facilities that are tailored to the requirements of the target groups, with an increased focus on healthy living. With an emphasis on long term income production compared to the direct sales approach, it is also critical to ensure both the initial delivery of the scheme and its long term operation are very cost efficient.
RD: How is this likely to affect your expectation from the project team?
RP: With Buro Four’s help, we’ve selected a team that has extensive experience of the residential sector and a clear understanding of the differences between a private sale development and our private lease model. We have also focused on appointing consultants that create the right team dynamic to challenge conventional approaches to project delivery and offer relevant innovation.
RD: Does that mean that you’ll be looking to adopt modern methods of construction?
RP: Viridis is constantly seeking to deliver all development schemes in the most efficient manner. This means we have to review all methods of construction - established and new to achieve the optimum delivery. Our investors have businesses all over the world and are also keen that we take ideas from as many different places as possible and test them to see what benefit they give us here in the UK. In the very early stages of Kenavon Drive, we spent a lot of time thinking about how the construction method may drive the design, and vice versa. This means that we take a scheme to planning with the flexibility to accommodate different construction methods.
Kenavon Drive is an industrial property located in central Reading and close to the Kennet and Avon Canal. The existing buildings are surrounded by a mix of residential and retail uses and it is a short walk from the mainline rail station which provides a direct link to London in 25 minutes. The site has been designated as an area of regeneration and Viridis is currently working on proposals to develop a new residential quarter which will be held for long term income generation.
Project Manager: Buro Four
Architect: Scott Brownrigg
Services Engineer: Hoare Lea
Structural Engineer: AKT II
Quantity Surveyor: Rider Levett Bucknall
Planning Consultant: Red Kite