Publications

- September 1, 2022: Vol. 16, Number 8

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Living it up: As the German market has shown, investors remain confident about the residential sector, despite consumer anxiety and the threat of further regulation

by   Bennett Voyles

Many European renters are anxious about the future, and housing afford-ability, in particular. And it’s easy to see why.

Home prices rose 10 percent in the European Union year-on-year in the fourth quarter of 2021, and rents climbed 1.1 percent, according to Euro-stat. The figures were the latest chapter in a long-running trend that has seen home prices soar by 42 percent since 2018 and rents rise by a little more than 6 percent over the same period. And on top of everything else, inflation is now running about 8.6 percent in the euro zone.

Could this lead to a political backlash for landlords? European property investors, as a group, are clearly worried about rent caps and other kinds of regulation hurting returns. A recent Knight Frank survey found that commercial real estate investors identified regulation as a top risk factor (55 percent), tying with rising development costs (55 percent), and ahead of rent control (46 percent) and affordability (46 percent).

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