- JP Morgan and Haven Realty Capital entered into a joint venture agreement on November 15.
- The companies plan to acquire up to $1 billion in construction rental properties, starting in Atlanta.
- Housing experts warn that it can take a long time to bring rental properties to market.
A new joint venture between one of America’s largest banks and a growing construction rental company is the latest sign that big investors aren’t getting caught up in the volatile real estate market.
Haven Realty Capital and JPMorgan Chase’s asset management arm said they would invest up to $1 billion to develop single-family construction rental homes across the country, according to a Nov. 15 announcement.
The duo plans to start investing with up to $415 million in equity. The first installment includes the purchase of his 250 homes in three of his communities around the Atlanta metropolitan area, with the transaction likely to close within the next 90 days, the statement said. increase.
The partnership comes at a time when demand for new homes continues to decline. According to Census Bureau dataMeanwhile, the National Association of Home Builders report that Builder trust is the lowest level Since 2012, this is due to rising interest rates and construction material costs.
“The sell-home market is straining home builders and their ability to add to the housing stock with recession fears, inflation and rising interest rates,” Haven founder Sudha Reddy said in a statement. The partnership will allow the company to work with homebuilders like Haven, who are “increasingly accustomed to selling entire communities to operators.”
Build to Rent is a ‘useful response to a market need’
The build-to-rent trend first emerged during the Great Recession as a way for home builders to continue supplying when consumers weren’t buying homes. It refers to a process in which a developer builds an entire community of single-family homes, typically single-family homes, which are later rented out by an operating partner.
This trend gained momentum during the COVID-19 pandemic. Soaring demand for single-family homes and suburban living.
Haven Realty has emerged as a national leader in its field with a portfolio of 35 build-to-rent communities worth over $1.2 billion. Similarly, JP Morgan is one of the few companies pioneering digital rent payment options For lessees and landlords.
like an institutional investor fund-raising Even if Pension funds and public enterprises are steadily acquiring single-family homes Borrow for profit. This has only increased the competition for housing. Affordability of housing is a top concern for many.
But others, like Tomasz Piskolski, a real estate professor at Columbia Business School, believe the build-and-rent model is more efficient than the traditional model of selling new homes to individual individual buyers. There is also
He told Insider in early November: The build-to-rent trend is “effective response to market needs”.
“Professional rental companies are in some ways more efficient and may help solve the affordability problem due to the currently very high mortgage rates.” I can’t afford to buy it.”
Not everyone agrees with Piskorski’s assessment.
Housing experts like John Burns, of the real estate consulting firm of the same name in Phoenix, Arizona, Warned developers against going ‘all in’ on build-to-rent Because it can take a long time to bring these communities to market.
“We’re still very bullish overall, but it’s not all going well,” Barnes said. told an insider in October.