Savills (SVS) & Grainger (GRI): 2 build to rent stocks to buy now

Highlights 

• The housing prices and rents in the UK are likely to continue to increase through the next 12 months.
• Grainger has to credit 9,109 operational rental homes and 8,851 in its pipeline worth £2.1 billion.
• Savills’ board announced an interim dividend of 6.0 pence per share to shareholders in H1 2021.

UK housing prices and rents are surging due to a demand and supply imbalance, according to the Royal Institution of Chartered Surveyors. The number of new house agreements declined for the third consecutive month in September 2021, and 15% of property brokers registered a decline in sales. Lack of inventory is creating competition among buyers, thus putting upward pressure on prices. About two-thirds of the surveyed professionals reported an increase in house prices.

Over 65% of the surveyors estimate that housing prices and rents in the UK will continue to increase through the next 12 months. Prior to the recent tapering of the stamp duty holiday, the sector witnessed an activity rush.

In the rental market, 62% of the surveyed professionals registered an increased number of people looking for property rentals in September, and 21% reported a decline in new landlord instructions. The imbalance is expected to drive up rents. Here is a detailed review of the investment potential in two build-to-rent (BtR) stocks – Savills and Grainger.

(Data source: Refinitiv)

Savills Plc (LON: SVS)

Savills is an FTSE 250 listed residential, commercial and rural property advisor and operates through 600 offices in Europe, the Americas, Africa, Asia Pacific, and the Middle East. In May 2021, Savills Investment Management, a subsidiary of Savills, inked a strategic investment alliance agreement with Samsung Life.

Savills (SVS) & Grainger (GRI): 2 build to rent stocks to buy now

The shares of Savills are currently trading at GBX 1,347.00, up by 0.45% at 9:58 AM GMT+1 on 14 October 2021. The market cap of the company is £1,918.73 million as of 14 October 2021.

Savills’ revenue was £932.6 million in H1 2021, representing an increase of £141.2 million or 18% year-on-year compared to £791.4 million in H1 2020. The group’s profit before tax was £63.8 million in H1 2021 compared to £7.7 million in H1 2020.

Savills’ board announced an interim dividend of 6.0 pence per share to shareholders in H1 2021.

Grainger Plc (LON: GRI)

Grainger is a United Kingdom-based residential property dealer engaged in the private rental housing business. The company has to its credit 9,109 operational rental homes and 8,851 in its pipeline worth £2.1 billion. Today, the company completed the acquisition of Merrick Place, a 401-home build-to-rent plan in West London, for £141 million.

The shares of Grainger are currently trading at GBX 307.80, up by 3.71% at 10:32 AM GMT+1 on 14 October 2021. The market cap of the company is £2,200.09 million as of 14 October 2021.

For the half-year ended 31 March 2021, Grainger’s net rental income was £34.7 million compared to £37.0 million in the financial year 2020. The company’s board announced an interim dividend at 1.83 pence per share to shareholders.