Investment in the EMEA residential sector has the potential to reach €70-85 billion per year over the next five years, according to one of the findings of the EMEA Living Sector Survey by Cushman & Wakefield (C&W). This is based on a survey of institutional investors who manage over 1.4 trillion euros in property assets worldwide.
It reflects great optimism for strong growth in the sector, driven by demographic changes, supply shortages and social megatrends. More than half of those surveyed stated that they currently have more than 20 per cent of their property portfolio invested in the residential sector. Almost 80 per cent expect their investments to increase over the next five years.
This development is also reflected in the investment volumes for 2023. 22 per cent of all property investments in Europe were made in the residential sector. In 2007, this figure was just 6 per cent.
The markets in Germany and the UK are expected to benefit the most from the recovery in residential investment volumes. Apart from these two key markets, the geographical focus is strongly on core European countries such as Spain and France, with Ireland and the Nordic countries attracting additional interest.
Tina Reuter, Head of Germany at C&W, comments: ‘Our survey shows that investors are very interested in diversifying the residential sector. We therefore expect segments such as social housing, senior housing and shared housing to grow in the medium term, particularly in Germany.’
‘We are pleased about the optimism of investors. It confirms that the residential sector is firmly established as a key component of a balanced commercial property portfolio and that investor interest in the stability and demographically-driven growth it offers continues to grow,’ adds Tom McCabe, Head of EMEA Living Research & Insight at C&W.
‘Investment in the residential sector tends to focus on rental, retirement and student accommodation. Indeed, this is where institutional investor interest remains strongest,’ says Jan-Bastian Knod, Head of Residential Investment Germany, C&W, referring to the German market.
The survey also revealed that almost 90 per cent of investors see demographics as the main driver of demand growth. Other findings include: Almost 80 per cent of respondents consider sustainability to be a key portfolio objective. A further 70 per cent stated that they are willing to pay a premium for residential properties with strong sustainability features. Just over half of those surveyed stated that they expect capital values to stabilise by the end of the second quarter of this year.
