Property developer Sigma Capital has formed a £700m venture with Shariah compliant Gatehouse Bank to build thousands of rental homes in Britain, looking to gain from the needs of a growing population.
The companies said yesterday the joint venture would initially build 2,000 new homes in Liverpool and Salford, with a total development cost of £200m. They said there was the potential to grow the portfolio to 6,600 homes, with a total cost of £700m.
“As we compete in a tough global race, Sigma’s joint venture with Gatehouse is brilliant news for the North West and for Britain, showing that we are open for business,” Prime Minister David Cameron said in a state- ment.
“The rental market is a vital asset to this country and this new investment will help to boost local economies, create jobs and deliver more homes for hard-working people,” he said.
The government has made housing a key issue in the run up to the 2015 election as the country copes with a mismatch in housing supply and demand, providing loans to help Britons purchase homes and funding a £1bn Build-to-Rent fund to encourage investment into rental hous- ing.
The deal also comes as the country pushes for London to become a leading hub for Islamic finance.
In October, it became the first Western country to issue a sovereign sukuk, or Islamic bond.
Gatehouse will provide the equity element of the venture and both parties are in negotiations with banks for financing to complete the initial £200m phase, they said.
Construction is expected to take place over 24 months once financing is secured.
The bank has an option to provide more equity for the £500m needed to build a further 4,600 new homes, the companies added.
The new homes will be built on land procured and developed by Edinburgh-based Sigma.