London, June 4: As institutional investors bet on a shortage of rental properties, U.S. private equity giant Blackstone has agreed to buy 1,750 new homes from British housebuilder Vistry for rental purposes.

The properties have a development value of 580 million pounds ($740 million), and Vistry said on Tuesday that it has reached an agreement to purchase them with Blackstone Real Estate and minority investment partner Regis.

Eight months have passed since Blackstone's first purchase from Vistry, when the private equity firm acquired over 2,800 new, mixed-tenure residences in November.

"Institutional private capital can play an important role in providing high quality housing stock across the UK, particularly in the private rented sector which is significantly undersupplied today," said in a press release James Seppala, head of European Real Estate at Blackstone.

With support from Blackstone and Regis, Leaf Living, a private rental sector housing provider, will oversee the most recent portfolio, which is centred in the southeast of England.

The bulk of the residences are anticipated to be completed during the following two years, with the first completions under the arrangement anticipated by the end of this month.

Due to persistent demand for its cheap homes, primarily from housing associations and the private rental sector, Vistry has recently sounded a more optimistic note on the housing sector than its peers.

Following rivals' warnings of subdued market conditions this year, including Taylor Wimpey (TW.L), opens new tab, and Persimmon (PSN.L), opens new tab, Vistry increased its annual homebuilding aim last month by roughly 3% to over 18,000 units.

During a period of rising borrowing costs and shifting work habits, large investors are increasingly placing money into rental homes, which have performed better than other commercial property sectors like offices and retail.