Sigma Capital sees huge potential in Scottish private rental market

Sigma Capital Group, the residential development and urban regeneration specialist, has given an upbeat outlook for the year and hailed its push into the Scottish private rented sector after revealing solid first-half numbers.

Sigma Capital's chief executive Graham Barnet. Picture: Paul Dodds
Sigma Capital's chief executive Graham Barnet. Picture: Paul Dodds

The Edinburgh-headquartered firm has been largely focused on property projects and investments south of the Border but earlier this year it launched a dedicated Scottish fund with initial resources of £43 million – £30m provided by the Scottish Government’s Building Scotland Fund.

Chief executive Graham Barnet said the firm was eyeing several opportunities north of the Border and was likely to make a further announcement towards the year end on selected sites. He added that the market potential to roll-out its model in Scotland was “bigger than initially thought”.

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The Sigma Scottish PRS Fund is billed as the “first dedicated vehicle to deliver new, professionally-managed rental homes for families in the private rented sector in Scotland”.

Barnet said that market fundamentals remained strong with high levels of demand for quality, family-sized rental homes from workers on moderate incomes.

The interim results showed that revenues in the six months to 30 June increased by 19 per cent to £5.8m. Profit before tax for the period rose by 3 per cent to £4.3m.

The board will propose a final shareholder dividend alongside the full-year results, in line with the company’s “progressive” dividend policy.

During the first half, the 1,000th new rental home was delivered for the PRS REIT real estate investment trust, just two years after the fund’s launch. Total housing delivery is expected to amount to some 5,400 new rental homes, generating a stabilised dividend of 5.5p per annum.

Sigma, which also has offices in Manchester and London, said the second half had started well, with 42 development sites – both managed and self-funded – underway as of the end of August, set to deliver a further 3,429 new rental homes.

Barnet said: “The effectiveness of our model for large-scale delivery of family homes for the private rental market is now firmly established.

“In May, we delivered our 1,000th home for the PRS REIT, just two years after its launch and delivery is increasing as development sites complete.

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“We expect to commit the balance of the PRS REIT’s net funds to further sites over the next few months, and have seven of our own self-funded developments underway.

“The launch of the Scottish PRS Fund, which is backed by Scottish Government, is exciting and takes us into Scotland, a new geography for our model. Demand for high quality rental homes for families remains high.”