There is no question that the triumph of the residential asset class in Europe since 2015 is impressively reflected in the figures, in current surveys and forecasts: there is no end in sight for the time being.
The rapidly increasing appetite of almost all types of buyers for residential investments is driving the investment volume to unprecedented levels. The allocation share has multiplied from around 5% in 2007 to almost 30% in the first half of 2021, our expectation is around €500 billion investment volume in Europe by the end of 2021. The expected merger of Vonovia and Deutsche Wohnen to form the largest private landlord in Europe alone is expected to contribute another €18 billion. The current dynamics can be seen impressively in our new infographic on the European residential investment market. However, it also becomes clear that "the market” is segmenting into ever faster growing submarkets - with clearly differentiated investment profiles.
Several trends are leading to the "Rise of Resi":
- Safe haven attitude: defensive, risk-averse character of residential investments
- Highest risk-adjusted returns in the sector compared to other asset classes
- Increased need for diversification, both in terms of asset class and geographically
- ESG megatrend (impact and social investing) driving affordable housing
- Positive fundamentals: demographics, household income
- Urbanisation meets tight supply in many locations
- Investments in student housing, senior housing and healthcare real estate are developing their own investment profiles and cycles and are more on the rise