abrdn, an Edinburgh-based investment company and asset manager, forms joint venture with UK retailer John Lewis

abrdn and John Lewis have agreed to build 1,000 new rental homes in London and the South East, with a gross development value of about £500 million ($614 billion).

The joint venture brings together the investment management experience of abrdn, a large investment manager with £7.4 billion of residential assets under management, and John Lewis Partnership’s brand, the firm said in a statement.  

John Lewis is the first UK retailer to turn some of its shops and other properties into houses, creating a platform for the UK’s growing build-to-rent market which, to date, has largely been confined to specialist real estate companies. 

The deal remains subject to the satisfaction of agreed completion conditions, the firm continued.

Neil Slater, head of real assets at abrdn, said: “The critical lack of quality rental accommodation in the UK needs to be addressed, so we are delighted to partner with the John Lewis Partnership to provide the required institutional investment.”

There is estimated to be a shortage of 75,000 rental properties in London.

“The ambitions and responsible ethos of our brands both strongly align, and our partnership should offer investors long-term returns and give residents confidence in a top-quality living experience,” Slater continued.

“We are really pleased to continue to expand abrdn’s capabilities in real estate and evolve our client offering through this exciting partnership,” he said.
 
Nina Bhatia, executive director for strategy and commercial development at the John Lewis Partnership, added: “Our partnership with abrdn is a major milestone in our ambition to create much-needed quality residential housing in our communities. Our residents can expect homes furnished by John Lewis with first-rate service and facilities.”

Research by the property firm Savills predicts that the build-to-rent residential property market in the UK will double in size, with 30,000 new homes completed annually by 2026.  
 
“The move underlines our commitment to build on the strength of our brands to diversify beyond retail into areas where trust really matters," Bhatia said.
 
Planning applications for the joint venture are due to be submitted next year, when a public consultation process on the site in Reading will start.