The PRS (Private Rented Sector) market in Liverpool continues to progress with a number of new proposals, planning applications and developments announced during the last 12 months. With the city continuing to prosper as a place to live, and the current built stock not offering the levels of accommodation/service renters are looking for, the prospects for PRS in the city are good.
Although it has been encouraging to see the increased level of demand there still appears to be a slight reluctance from some funds and developers to consider the city as a suitable place to invest. Maybe this is down to a lack of visibility on rents, concerns over the size of the residential pipeline or economic/jobs growth. Whilst each of these individual issues needs to be considered those funds/developers that know the city well are less concerned and are taking advantage of the gaps left in the market.
What many of the “doubters” are not realising is that the city is changing dramatically not just in physical terms. Owing to its strong cultural, leisure, retail and historical assets the city is attracting a large and growing number of “outside” renters and buyers the majority of whom are wealthier than the locals and are driving a real shortage of decent property to rent (and buy) between the middle to upper end of the market.
Quite surprisingly we have recently seen the arrival in the PRS market in the city of the RSL/RP’s (former housing associations) who appear to have “bought into” the PRS model in a big way. Following on from Moda/Apache’s announcement to build the Lexington Tower on Princes Dock we have seen an announcement from Your Housing Group to build The Hive, a £55million 276 unit scheme and Regenda’s proposed £21million Plaza 1821 scheme which will comprise 115 units. Whilst we all expected them to come to the city and improve the quality of their rented stock these schemes represent a huge leap of faith in the future quality and number of renters that the city will see over the next 5-10 years.
Whist the docklands, and Liverpool Waters in particular, is attracting most of the attention here at City Residential we believe the most successful schemes may well be those well positioned city developments located close to the business and retail cores. A great example of this is Anwyl Homes proposed £60million 336 unit scheme on Pall Mall which is already attracting interest from a number of funds looking to develop a PRS foothold in the city. With its location opposite the proposed new Pall Mall exchange scheme, the business district and the thriving Caste Street conservation leisure area we expect it to represent the future of PRS in the city.
Although we are positive about the prospects for PRS in the city there will be some losers amongst the select winners. We are beginning to see applications in for PRS schemes in secondary locations, where the mix fails to take account of the changing demographics and where the designs/specifications may well make the development unviable. Whilst the city can support a large increase in PRS units they have to be in locations where renters want to live and designed with their needs in mind. Many of these schemes are also being proposed by landowner/developers with little track record of large urban development not the type of scheme that we expect the upper echelon of UK residential funds to end up funding/buying.