Global real estate operating company City Developments Limited (CDL) has expanded into the United Kingdom (UK) Private Rented Sector (PRS) with the acquisition of a £15.4 million (S$27.5 million) freehold site in Leeds from Alpha Real Trust.
This translates to about £80 (approximately S$142) per square foot for the 193,752 square feet (sq ft) site.
Full planning permission has been obtained for the site which has a residential and commercial Net Lettable Area of around 386,000 sq ft and 16,000 sq ft respectively.
CDL plans to develop a 664-unit build-to-rent residential project with retail space located within the site’s attractive heritage arches beneath a viaduct. The project is expected to be completed in 2023 at an estimated total development cost of £140 million (approximately S$250 million). Net yield is expected to be 5.0% annually.
” Brexit is expected to have limited impact on private rented sector as demand is mainly driven by locals.”
Mr Sherman Kwek, CDL Group Chief Executive Officer, said, “Expanding into the UK PRS is in line with our strategy to grow CDL’s recurring income. Due to increased labour mobility and the growing popularity of renting, we see strong growth potential for this sector. Moreover, the PRS is a key part of the government’s agenda to solve the UK’s housing supply-demand imbalance. Brexit is expected to have limited impact on this sector as demand is mainly driven by locals.”
“We are excited to introduce our first PRS project in Leeds whose economy has continued to grow strongly. PRS demand there is fuelled by a wide spectrum of tenants including young professionals and students. With the increased appetite for purpose-built accommodation that is professionally managed, we are leveraging our core expertise as a residential developer and landlord to expand into this sector for long-term rental growth. CDL will create an iconic estate in Leeds and seek further opportunities to build a portfolio of quality PRS projects.”
To enhance recurring income, CDL also acquired two prime Grade A London commercial properties in 2018 for £568 million (approximately S$1.02 billion), capitalising on attractive pricing and yields. The two freehold buildings, 125 Old Broad Street (the former Stock Exchange Tower) and Aldgate House, are poised to benefit from the tightening of London’s existing office stock and limited new supply which will drive rental growth.