Failure to analyse big data affecting business development in rental sector
Developers in the rental sector are missing out on higher income and capital returns for investors by not taking a data first approach to understanding supply/demand dynamics or forecasting renter behaviour, according to new analysis by proptech company Movebubble.
Aidan Rushby, CEO, Movebubble, said: “It’s 2019 but the sector is heavily under-utilising data to make decisions across the value chain.”
Build-to-rent enjoyed £3.1bn of investment in 2018, up a third on 2017, and £33.8bn of institutional equity is thought to be targeting the sector over the next five years according to Property Investor Today.
Sophisticated investors are seeking to address the supply/demand imbalance in the UK’s private rented sector and capture a portion of the £1.5tn market, that generates £65bn in rental income.
The UK Government has set targets to build more than 3 million new homes by 2040. The company has learnt when speaking to developers that land is not being built on due to difficulties unlocking its value or planning, making it less viable.
Movebubble’s data shows that developers can pay a premium for land, yet still make higher returns.
Zero deposits, gyms and other amenities are built to entice renters, but the value placed on these amenities has not been quantified accurately.
Movebubble’s analysis shows that the demand in London for two beds is around 23%, whereas the supply in build-to-rent properties is 48%. Developers can expect a 5% higher return by simply optimising the mix of units.
The behavioural data Movebubble has collected, shows renters in this segment are planning their move, on average, two months in advance. The renting platform believes this can be used to accurately gauge the renter’s moving stage and target them with properties at the right time, leading to marketing cost savings for built-to-rent operators.
Quintain, the forward-thinking investor and developer behind the new Wembley Park neighbourhood Tipi, recently took a 10% stake in Movebubble.
“Such an innovative company joining us, validates our data driven approach,” says Rushby.
There are nearly 73,000 build to rent homes completed under construction or planned in London, Manchester, Newcastle and many other UK cities, demonstrating huge investment.
According to Movebubble’s data, developers and investors are missing out on income and capital gains at every stage in the value chain. The company believes the upside of maximising data in this sector is massive and they are already working to disrupt the traditional approach.