Immobilien AG, the pan-European real estate investment manager, has launched its 10th PATRIZIA INSIGHT study on the European residential markets. The findings show that every fifth euro of European real estate investment is invested in the wider residential universe, an increase of more than 50 percent during the last 10 years.
Dr Marcus Cieleback, PATRIZIA’s chief economist and author of PATRIZIA INSIGHT, explains:
“Over the last decade, the European residential market has undergone significant change. Today residential investments are made in a truly pan-European context and well-known megatrends, such as aging and urbanization, combined with the hunt for stable income streams by institutional investors, are increasing demand even further.
“We expect residential investments to remain high on the agenda for institutional investors. However, the ongoing strong investor interest in residential properties has resulted in a shrinking supply of institutional-quality assets available for purchase. This means that the importance placed on local expertise and experience in investment strategies across the risk spectrum, including development activity, is increasingly important.”
Key Insights:
- Solid employment growth continues to support a positive residential market outlook with average real price growth of circa 4 percent in 2017, well above inflation
- Attraction of residential universe set to grow even further due to strong demand drivers across Europe, including aging and the trend of urbanization
- Urbanization to create winning and losing cities with the number of winners smaller than number of losers as only a third of European regions are expected to witness working population growth
- Supply of new housing stock stabilizing the market more than expanding it as current level of construction equates to 0.7 percent of stock
- Demand to continue to exercise upward pressure on rental income, supporting residential capital values
- Given high demand and low supply, housing development remains an attractive option across Europe, particularly for IRR driven investors
- For European buy-and-hold multifamily housing strategies total returns in the range of 5 percent to 7 percent p.a. in the next five years can be expected. Capital growth will contribute between 2 percent and 3 percent p.a. to this.
A full copy of the PATRIZIA INSIGHT report can be found at:
https://www.patrizia.ag/en/research-press-releases/research/research-releases/
