The UK's private rented sector, that includes the build to rent market, will be worth £70bn by 2021 with London gobbling up 65 per cent of the investment in the market, according to a new research by Knight Frank.
Other regions in the UK will attract 35 per cent of the investment in the sector, the study found.
Knight Frank said institutional investment in the private rented sector currently stands at £25bn.
Separately, Knight Frank's tenant survey of 10,000 people found that rental affordability remains the biggest concern for tenants looking for rental property.
It also found that nearly seven in 10 (68 per cent) renters across the UK expect to be living in the rented sector in three years’ time.
Young professionals (aged 25-34) make up the largest proportion of households living in the sector. During the next five years, Knight Frank expects to see "slightly faster growth" in the number of under-25 households in the sector, as well as an increase in older households.
James Mannix, head of residential capital markets at Knight Frank, said: “The strength of the UK private rented sector has grown demonstrably in recent years. As consumer demand for affordable, flexible accommodation continues to rise, the sector is firmly establishing itself as a key opportunity for institutional grade investment, due to its long-term potential.
“In order to enhance build-to-rent specifically, the main hurdles of planning policy and land supply must be addressed. With both issues being recognised in the recent housing white paper, we hope to see the government encourage more build-to-rent and help to better identify developable land.”