European investors plan to significantly increase their commitment to the residential sector, according to a new report published by global advisory firm Knight Frank.
The annual study, European Living Sector Investor Survey, conducted by Knight Frank, showed that approximately 64 billion euros of new capital will be allocated for investments in the residential sectors over the next five years. This includes investments in the Build-to-Rent (BTR), Purpose-Built Student Accommodation (PBSA) sectors, as well as senior housing.
The study, which covers 55 leading investors managing residential assets collectively worth over 98 billion euros, found that all respondents plan to increase their commitment to the residential sector, with 41% intending to increase allocations by 40% to 100% of current levels.
In this year’s report, the single-family housing segment was identified as the main area of growth: 54% of investors plan to invest in this area by 2029, compared with the current 31%. Meanwhile, private student halls were recognized as the most attractive investment target for the next five years, followed by multi-family housing development.
Issues related to environmental protection, social responsibility, and corporate governance (ESG) continue to have a significant impact on investment decisions. A sizable 69% of respondents regarded investors as ‘important’ or ‘very important’ in shaping approaches to ESG – surpassing regulatory changes (65%) and tenant requirements (52%).
“The residential sector is still attractive to institutional investors with large capital, waiting to be engaged. As the European Central Bank continues to cut interest rates, we expect significant increase in activity in the coming months. Even though challenges related to regulations and housing availability remain, the robust fundamentals of the rental market continue to attract investments,” comments Stuart Osborn, Head of European Living Sectors Transactions at Knight Frank.
“The potential for developing the housing sector in Poland is significant. Around 10% of the student population lives in dormitories, and the proportion of people over the age of 65 currently stands at 20%, implying high potential for investment in private halls of residence (PBSA) and nursing homes,” explains Krzysztof Cipiur, Managing Partner, Head of Capital Markets at Knight Frank. He also added, “in the BTR sector, investors choose land for service use due to high costs and shortage of residential land.”
“There is a real need to increase and rejuvenate competitiveness in the European economy, and the living sectors will play a significant role in changing the situation across the continent. London, Madrid and Berlin are the top locations for investors, but Dublin, Milan, Amsterdam, and Barcelona are also on the wishlist,” adds Katie O’Neill, Associate in the Global Living Sectors Research at Knight Frank.
Respondents highlight several key challenges for the sector. Potential new regulations were identified as the biggest short-term operational challenge by 62% of respondents, closely followed by concerns over affordability. These issues have come to play in the face of steep rent hikes in various European cities and growing pressure for rent control.
The Knight Frank research indicates a clear improvement in bond market sentiment, with 60% of respondents expecting their debt requirement to increase over the next twelve months. This marks a significant jump compared to last year’s survey when only 20% reported such a need.
Source: https://ceo.com.pl/europejscy-inwestorzy-planuja-rekordowe-inwestycje-w-sektor-mieszkaniowy-67541
