Legal & General has exchanged contracts on its first Build To Rent (BTR) scheme in Scotland.
Legal & General will forward fund Drum Property Group to deliver 324 apartments within Glasgow’s new Buchanan Wharf waterside regeneration area, which will also house the new Northern European hub of Barclays Bank.
Dan Batterton, head of BTR at LGIM Real Assets, said: “Glasgow has seen very low levels of residential development over the last decade.
“This acute supply and demand imbalance has made it an important target for us, demonstrating our commitment to quality asset selection, with sites cherry-pickedby assessing needs-based demand to provide long-term, stabilised cashflows for investors.
“With Glasgow predicted to continue to see notable population growth, this latest acquisition is another great example of Legal & General investing in an area with significant urban regeneration potential and providing large scale sustainable rental schemes which will have a positive long term socioeconomic impact, delivering much needed homes.”
Consisting of two 18 storey towers, current design iterations include dining space, a gym, a residents’ lounge and a games room.
Buchanan Wharf, which overlooks the River Clyde, will also offer a 4,250 sq ft communal roof terrace and is walking distance from Glasgow Central Station and the International Financial Services District, linked by the Tradeston Bridge.
Mathieu Elshout, senior director Private Real Estate at PGGM, added: “As a responsible investor of Dutch pension capital, it is our ambition to build long-term partnerships with prominent UK real estate players to invest in sustainable developments.
“Our growing BTR venture with Legal & General is delivering on this goal, adding quality stock within key regeneration hotspots across the UK.
“With Glasgow continuing to suffer from a severe lack of homes, we are delighted to be partnering with Legal & General to enter the Scottish market, investing in a high quality scheme which will have a positive impact on the built environment over the long term.”
Paul Miller, managing director principal investing at Legal & General Capital, said: “We are delighted to be making our first Build To Rent investment in Scotland as part of our ambition to tackle the housing shortage all across the UK. Scotland, and Glasgow in particular, has been a key target for Legal & General as part of our Future Cities initiative.
“We are excited to be bringing a long term sustainable rental scheme to the area to meet the demands of this vibrant and fast-growing city.”
Over the last 10 years, Glasgow has seen particularly low levels of residential development, compared with other major cities. Only 517 residential units were completed in 2017, falling substantially short of the 2,500 new homes needed per annum, according to Glasgow City Council.
Buchanan Wharf represents Legal & General’s fourth acquisition in Glasgow over the last 12 months.
Last year, Legal & General began development of a new 160 room hotel; acquired the Scottish court and tribunal building, Atlantic Quay 3; and forward funded the Atlantic Square Development to provide a major new UK government hub.
Buchanan Wharf has been purchased by co-investors Legal & General Capital and PGGM, as well as additional pension fund capital raised by LGIM Real Assets through its open-ended BTR fund. This latest scheme will bring Legal & General’s BTR portfolio to 3,700 homes across the country, with ambitions to have 6,000 in planning, development or operation by the end of this year.
Legal & General was advised on the acquisition by Savills.