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The size of the market

Residential Property is the UK's largest asset class. At over £5 trillion*, it is worth more than listed equities and commercial property combined. The Private Rental Sector (PRS) alone is estimated to have a value of more c. £1 trillion**.

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The graphic compares the total value of UK residential property to that of UK commercial property, and UK equities. Residential property is by far the largest asset class in the UK. Zoopla research (estimating market values to December 2012) puts the total value at £5.7 trillion, more than twice the market cap of all UK equities at £1.9tr (FTSE All Share Dec 2012) and eight times the value of commercial property (Property Data Report 2012).

Historically, there have been relatively few avenues for investors to access residential property as an investment asset:

  • Private individuals with sufficient time to commit to managing a portfolio, and who have the capital to buy or develop these assets.
  • Institutions such as pension funds with the ability to deploy substantial capital into a large portfolio and enjoy the benefits of investing at scale
  • High Net Worth or Sophisticated investors who have the risk appetite to buy unregulated, often speculative, collective investment schemes.
After many years of focusing on the commercial property sector, more professional investors are now exploring the investment potential that exists in residential property. This change in investor sentiment is reflected in the decision in February 2012 by the Investment Property Databank (IPD) to include residential property in its UK ‘All Property Index’ for the first time since its inception.  Going forward, this will allow direct comparison between the performance of the commercial and residential property investment markets, and should represent an important step in attracting institutional investment into the housing sector.

Source: * Zoopla Research December 2012; Annual Valuing Britain Survey; ** Savills Rental Britain Report March 2012

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