Living Sector market update: conviction remains, but capital is more selective

The latest Living Sector market updates from JLL and BNP Paribas Real Estate tell a consistent story. Investor conviction remains present, but capital is becoming increasingly selective.

The headline numbers are impressive. JLL reports that BTR investment reached £3 billion in the first half of 2026, while BNP Paribas records £2.2 billion of investment across BTR, Single-Family Rental and Co-Living in Q2 alone.

The more interesting story, however, sits beneath those figures.

Both reports highlight that activity is increasingly concentrated in a relatively small number of landmark transactions. The £1 billion-plus acquisition of Metra Living, alongside Greystar's purchase of Elephant Park, demonstrates that institutional appetite for high-quality, stabilised residential assets remains exceptionally strong. At the same time, forward funding activity has fallen sharply as developers continue to grapple with viability pressures, construction costs, financing conditions and an evolving regulatory landscape.

From a lawyers' perspective, we're seeing that same shift reflected in the transactions we advise on. Deals are taking longer to structure, due diligence is becoming more forensic, and parties are spending more time stress-testing viability, planning strategy, funding structures and regulatory risk. That's not a sign of a market standing still, but the hallmark of a sector maturing.

What hasn't changed are the sector's underlying fundamentals.  Demand continues to outstrip supply across BTR, SFR and PBSA, while institutional investment continues to broaden across the sector.

For me, that's the green shoots from both reports. This doesn't feel like a market that has no momentum, but rather like one becoming more disciplined. Capital is focused on quality, transactions are becoming more sophisticated, and long-term conviction remains strong. It will be interesting to see how the market returns from the Summer holidays…will the Autumn budget bring improving financing conditions, unlocking a broader recovery in development activity, or will this flight to operational assets become the market's new normal?

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