Investment volumes in European multifamily forecast to rise by 27% to €64bn over next five years

Residential investment accounted for 17% of total investment volume across Europe in 2018, up from just 6% in 2006.

Investor interest in multifamily housing is underpinned by the growing demand for rental homes across Europe, which CBRE says is driven by an increasing urban populous, social and demographic shifts and affordability constraints of homeownership, which is coupled with a structural lack of supply in many markets.

In CBRE’s EMEA Multifamily ViewPoint, The Rise of Investment in Multifamily Housing, the global real estate brokerage firm reports that the outlook for the multifamily residential sector is positive.

CBRE states this is because multifamily assets provide investors with long-term inflation linked returns, portfolio diversification, favourable risk-adjusted returns compared with other property classes, and a reduced vacancy risk due to the granularity of leases.

However, changing government policy is the most common cited major risk to the asset class, continual changes to the operating backdrop are disruptive, regulation itself is not necessarily bad for the sector, CBRE adds.

In the US, the most mature market globally, investment into the multifamily sector grew from $22bn in 2001, to $175bn in 2018, making it the dominant real estate investment sector. CBRE anticipates Europe will follow a similar trajectory.

CBRE reports on the growing investor interest in the sector, and how multifamily investments are performing against other sectors. The report also outlines the key factors driving growth in this multibillion-Euro sector, with social and demographic changes fuelling the sustained demand for rental homes across Europe.

Jennet Siebrits, CBRE Head of Residential Research, UK, explains:

“Our research into multifamily in Europe highlights how an increasing urban populous, social shifts and affordability constraints will lead to continued expansion of the private rental sector, ensuring sustained demand for rental homes. This, combined with a structural undersupply of new home in most markets, are positive indicators for investors.”

Thomas Westerhof, CBRE Head of Residential Investment Properties, Continental Europe, added:

“Multifamily residential assets in Europe are highly sought-after by investors and offer a number of inherent benefits, including long-term inflation linked returns and portfolio diversification. In most European markets we looked at, these residential investments had a higher average total return over ten years than the office or retail sectors.”

james.wallace@realassetmedia.com