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Residential Panel ERES

Residential Panel ERES. Dr Karen A Sieracki MRICS Visiting Professor University of Ulster Director, KASPAR Associates London 5 July 2013. Introduction UK Residential. Look at the UK Been some institutional interest State of the market – demand, supply, performance Issues.

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Residential Panel ERES

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  1. Residential PanelERES Dr Karen A Sieracki MRICS Visiting Professor University of Ulster Director, KASPAR Associates London 5 July 2013 KASPAR Associates Ltd

  2. Introduction UK Residential • Look at the UK • Been some institutional interest • State of the market – demand, supply, performance • Issues KASPAR Associates Ltd

  3. Residential Vehicles and Capital • Capital raising Jan-May 2013, 2 funds closed total of £455m (23%) out of UK total capital raised £1.94 bn • Possibility of PAIF structure • No residential REITs despite trying • EG Blackrock in US Single Family Fund 17,000 properties in 12 US markets, $3bn cost + 10% purchase price for refurb, LTV 66%, 20% IRR 5 yr hold KASPAR Associates Ltd

  4. Total Return UK Residential Source: IPD, PMA KASPAR Associates Ltd

  5. Capital Growth UK Residential Source: IPD, PMA KASPAR Associates Ltd

  6. ERV Growth UK Residential Source: IPD, PMA KASPAR Associates Ltd

  7. Income Return UK Residential Source: IPD, PMA KASPAR Associates Ltd

  8. UK Residential • Acts as a capital play, not income • Valuation on vacant possession • High management cost and special skill set required • Lack of availability of product to get economies of scale • Could link with a homebuilder (eg M&G and Berkeley Homes which was a sweet heart deal) • Need to “build to let” so valued on income • Why not special zones for rented housing • UK housing market in a bubble, Central London rents falling • Government schemes KASPAR Associates Ltd

  9. UK Residential • Demand for renting from inbetweenies • Affordability to rent and/or buy • £4 trillion market, larger than the commercial stock of £280bn • Supply usually individuals doing buy to let single property • Lack of modern space KASPAR Associates Ltd

  10. UK Institutional Requirement • Need size, scale and location • Private rented market fragmented with buy to let owners • Quality of stock and energy efficiency • Have to go out and find it for what return – commercial is easier KASPAR Associates Ltd

  11. UK Residential– Trophy or Trash? KASPAR Associates Ltd

  12. UK Residential So why bother? Can make more money elsewhere Bottom line for investors and the business KASPAR Associates Ltd

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