Steady yourselves – block buyers are back. I’ve noticed this trend as I’ve been more involved in residential developments and investments recently and there’s a feeling out there that they’ve returned in numbers. Unlike the last time block buyers abounded – which was in the run up to the last peak in 2007 – current buyers even seem happy to take minimal discounts and pay normal deposits.
Developers can afford to be a bit bullish given that they’ve needed to use more sophisticated piecemeal sales strategies over the last few years to get by. But many of them are so efficient at selling multiple units that bulk buyers have started competing. The return of these wealthy buyers – who, despite popular belief, do not always come from overseas – illustrates the strength of the product and London’s ongoing resilience. It should bolster confidence in the new homes property market at a time when not everyone is convinced it’s in the right place.
The staggering array of units entering the market is likely to test this theory to the utmost, but the encouraging thing is that many of these forward buyers are looking to bolster the private rented sector (PRS) rather than simply sell up for a profit.
However, one downside emerging is the difficulty some established, build-to-rent investors are having competing with developers in this market. To even the playing field, city planners could allow developers more latitude when it comes to “affordable” housing provision. Giving over housing to the PRS should be more popular in some areas than simply selling off on-site affordable housing, which doesn’t always sit well with local residents.
Having said that, recruiting more local planning officers would move things along considerably as well. Recently, a large housebuilder told me he could only start developing on 20,000 sites despite having 50,000 in planning as the average time it takes to “buy to break ground” is two years.
Once these obstacles are out of the way, bulk buying can only do good things for the PRS.