Grainger posts strong rental growth on high demand, short supply

Private housing provider and developer Grainger reported a strong rise in rental growth as it cashed in on a shortage of supply against higher demand.

Like-for-like rental growth has accelerated to 6.1% in the four months to end-January, the company said on Wednesday. Its private rental sector (PRS) portfolio was effectively fully occupied at 98.7% compared with 97% in 2022.

"The outlook for the PRS and build-to-rent investment market remains resilient relative to most other real estate asset classes, buoyed by the strength in the occupational market and strong rental growth," Grainger said in a statement.

"Whilst not immune to upward pressures on yields, the long-term fundamentals for our sector remain strong. Investor interest in the sector remains high, as strong rental growth offers support to valuations."

"Given the nature of the properties we sell, we have a lower reliance on mortgage purchases and first-time buyers and therefore are less affected by these softer aspects of the market, and our regulated tenancy portfolio has an inbuilt buffer because of the portfolio's valuation, which is valued at 17% below vacant possession value."

Reporting by Frank Prenesti for Sharecast.com