- Self-storage and private rental markets strong
- Firms all investing for future growth
- Valuations yet to respond due to high rates
While shares in UK property stocks are stuck in the doldrums due to rising interest rates, the latest announcements from a leading self-storage firm and a pair of property rental groups suggest it is very much ‘business as usual’.
A GROWING MARKET
In its first-quarter trading update, Big Yellow Group (BYG) posted a 5.4% increase in like-for-like revenue and a 6.7% increase including recent store openings.
Like-for-like occupancy increased to 85.2% at the end of June against 83.1% three months earlier, while the firm’s newly-opened 103,000 square foot store in Kings Cross has seen strong early trading and is expected to make a ‘valuable contribution’ going forward.
‘We have had a solid start to the year with a return to occupancy growth (and) average rents growing by 9% over the quarter’, said chief executive Jim Gibson.
‘In addition, our prospect numbers are back at pre-Covid levels, and encouragingly we are achieving higher conversion rates to move-in, which is perhaps indicative of a higher proportion of needs-driven serious enquiries.’
RECORD LEVELS OF DEMAND
Meanwhile, residential landlords PRS REIT (PRSR) and Unite Group (UTG) also reported strong like-for-like rental growth as the private rental market continues to boom.
PRS REIT, which owns over 5,000 privately-let homes across the UK and has another 500 properties in various stages of completion, saw rents rise by 6.5% in the 12 months to the end of May against a 5.7% rise in the same period to the end of March.
Occupancy was at 97%, or 98% including applicants who had passed referencing and paid a deposit, and rent collection remained at 100%.
Unite, the UK’s leading owner and manager of student accommodation, raised its forecasts for occupancy and rental growth for the 2023/24 academic year thanks to record demand for student accommodation at a time when many private landlords are leaving the sector due to higher interest costs and tougher regulation.
‘Reservations for the 2023/24 academic year remain at record levels, with 98% of rooms now sold, reflecting strong demand from both students and universities and the attractiveness of our fixed-priced all-inclusive offer’, said chief executive Richard Smith.
‘This supports an improvement in our rental growth guidance to around 7% for the 2023/24 academic year. Our strong leasing performance will continue to support our property valuations as the market adjusts to an environment of higher interest rates.’
