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Grainger and Bouygues fund to build 1,000 rented homes

Bouygues development and Grainger have launched a new build to let investment fund they hope will deliver over 1,000 new homes.

The fund is targeted at institutional investors, offering them an opportunity to invest in scale into the private rented sector.

Bouygues believe the fund is unique in that it has a dedicated portfolio of purpose built private rented sector development sites in London and the South-east.

The sites are expected to proved 1,000 units over three and a half years with construction due to begin in the first quarter next year.

The first units are due to be completed by the final quarter of 2013.

Bouygues will manage the investment and construction process, while Grainger will undertake the operation of the portfolio after completion, including property management, lettings, facility management, and fund and asset management.

The fund is due to last eight years, with a three year extension option.

Bouygues and Grainger will co-invest into the fund upfront and seek another £150m of additional equity from investors.

The companies hope it will prove attractive to UK and overseas investors who up to now have been hesitant in investing in UK rental accommodation.

They believe there is an appetite for investment into the sector in London and the South-east.

Grainger executive property director Nick Jopling said:  “The new partnership with Bouygues to set up the Bouygues & Grainger Fund and deliver new private rental buildings by 2013 represents a very exciting opportunity for Grainger.

“Although the fund is at a very early stage this represents a significant milestone in the evolution of the UK residential property sector and today’s announcement is a major step toward creating a large scale, attractive and accessible private rented sector in the UK, for both investors and tenants alike.”

Bouygues development chairman Madani Sow said:  “The alliance between Bouygues and Grainger is a great achievement and demonstrates to the UK residential market our willingness to establish the private rented sector as a new asset class that will address the huge Housing demand in the country.

“Together we cover the full spectrum of expertise required by the financial institutions and we are glad to announce that some projects are already available for the Bouygues & Grainger Fund.”

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