Canadian state-owned investment management company, Canada Pension Plan Investment Board (CPPIB), and UK-based property group Lendlease have established a new $2bn build-to-rent joint venture agreement in the rapidly gentrifying Elephant and Castle area of south London.

The partnership will, initially, begin with an investment of £450m to construct new homes, which will be for private rent. CPPIB will invest £350m and Lendlease will invest the balance. Construction is underway, and the first homes in this phase are expected to be completed in 2020. Another £800m of the investment is committed to housing and infrastructure in the development.

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Lendlease will develop, construct and manage the build-to-rent homes on behalf of the partnership. Further to the initial investment, the partnership will also pursue opportunities within Lendlease’s wider residential urban regeneration activities under a 50:50 JV agreement.

CPPIB told fDi that “this investment is a great opportunity for CPPIB to further diversify our European real estate portfolio, while at the same time addressing a need for purpose-built rental housing in the UK. Through this partnership, we are able to access a sector we believe is poised for long-term growth.”

“The rapid gentrification of Elephant and Castle, Bermondsey and Peckham is drawing in a wave of young professionals who now see them as exciting places to live,” said Colin Jones, partner at accountancy firm UHY Hacker Young.

Residents in these areas of south-east London witnessed a 5.3% rise in disposable income in 2014, growing faster than anywhere else in the country and compared to the UK average of 0.5 per cent, according to UHY Hacker Young, which collected the figures in November 2016. The rising incomes are a testimony to redevelopment in these areas which are attracting increasing numbers of young professionals.