Residential continues to grow as an institutional asset class and more and more investors will be attracted by the residential sector because of its growth potential and its income-producing quality, experts agreed at Real Asset Media’s European Residential Investment Briefing, which was held last week at TaylorWessing’s London headquarters.
‘There is a lot of money going into residential because investors are interested in a growing sector with a huge supply and demand imbalance,’ said Hugo Black, Partner, Acquisitions, Europa Capital. ‘I do not see that trend slowing down at all’.
Demographics point to continued growth and the urbanisation trend will lead to rising demand for accommodation in cities. ‘Countries are getting older but cities are getting younger,’ said Black.
In the UK alone, according to Savills projections, the build to rent market, which is currently worth £9.6 bln, will multiply in value to an astonishing £550 bln by 2050.
‘The market has been growing exceptionally fast and it will continue its upward trajectory,’ said Andrew Allen, Global Head of Investment Research Real Estate, Aberdeen Standard Investments. ‘At a time of ultra low interest rates, residential will attract more investors, even if prices have gone up’.
Guaranteed income streams are another incentive for investors to choose residential, especially at a time of great global uncertainty.
‘It is a difficult world to invest in,’ said Black. ‘Whether it’s trade wars or Brexit, it’s no time for heroics but rather a time for sensible investments. A lot of investors find safety in residential, especially if they want to invest for the long term’.
Allen agreed: ‘Building or owning assets with long-term income streams is clearly the rational thing to do. The upside for investors appears to be rising’.