(January 22, 2013) — Dutch pension manager APG has launched a joint venture with a property agent in the United Kingdom to target expected improving returns in the country’s residential sector.
The fund manager, which looks after assets for the largest Dutch pension fund ABP, has formed the GRIP unit trust with Grainger, a listed residential landlord in the UK, the companies announced today.
The unit trust is to acquire the portfolio owned by G:res, a UK market-rented property fund established and managed by Grainger since 2005, worth £349.4 million, the companies said.
Grainger owns a 26.2% equity stake in G:res worth £50.7 million and will invest a further £59 million. APG is to invest £158 million in the unit trust.
The outlook for the UK residential property market is healthy, according to some commentators.
The average cost of renting a home increased by 4.7% from December 2011 to £782 per month, according to figures published by market monitor Homelet. Rises in London and the South East of the UK rose more quickly than other areas, Homelet found. In the 12 months to the end of December, rental prices in the capital increase an average of 6.9%.
Ian Fraser, managing director of Homelet, said: “As confidence and demand in the private rented sector grows, so will overseas investment, and landlords will continue to maximise the return from their properties. However, this may also increase the purchase value of homes within these areas, and consequently affect people’s ability to become a home owner…thereby driving demand for rental homes, and average rents, even higher.”
Today’s announcement follows APG’s decision to enter the Indian property market, a decision it made public in July. The fund manager said it would lead a consortium of investors in a project to build accommodation for India’s growing middle classes in three of the country’s largest cities.