CityDev acquires $27.5 mil site in Leeds to develop 664-unit build-to-rent project

SINGAPORE (Mar 4): City Developments (CDL) is expanding into the rapidly-growing UK private rented sector (PRS) with the acquisition of a £15.4 million ($27.5 million) freehold site from Alpha Real Trust.

Located at Monk Bridge in Leeds, the site is about a 10-minute walk to the Leeds Train Station and two kilometres to the Leeds City Centre which comprises the financial, civic, shopping and cultural quarters.

CDL plans to develop a 664-unit build-to-rent residential project with retail space located within the site’s attractive heritage arches beneath a viaduct. The project is expected to be completed in 2023 at an estimated total development cost of $250 million. Net yield is expected to be 5.0% annually.

In addition, a public park will be developed on the viaduct, providing spaces for public functions, outdoor film screenings, pop-up restaurants and a pedestrian walkway leading to the the train station and city centre. Residents will enjoy private gardens, a sports area within the estate, leisure and retail facilities at their doorstep, and a wide range of services including concierge, parcel collection and a car sharing rental scheme.

Full planning permission has been obtained for the site which has a residential and commercial Net Lettable Area of around 386,000 sf and 16,000 sf respectively. The acquisition price translates to about $142 psf for the 193,752 sf site.

Sherman Kwek, CDL group CEO, says, “Expanding into the UK PRS is in line with our strategy to grow CDL’s recurring income. Due to increased labour mobility and the growing popularity of renting, we see strong growth potential for this sector. Moreover, the PRS is a key part of the government’s agenda to solve the UK’s housing supply-demand imbalance. Brexit is expected to have limited impact on this sector as demand is mainly driven by locals.”

To enhance recurring income, CDL last year acquired two prime Grade A London commercial properties for approximately $1.02 billion. The two freehold buildings, 125 Old Broad Street (the former Stock Exchange Tower) and Aldgate House, are poised to benefit from the tightening of London’s existing office stock and limited new supply which will drive rental growth.

As at 10.03am, shares in CDL are down 13 cents at $8.68.