Build to rent and PRS are fast-growing sectors across Europe as two factors combine to drive demand: people’s increasing mobility and need for flexibility and soaring prices, which have made buying a home more difficult for many.
Millennials, in particular, have driven the shift towards a ‘subscription society’ where people prefer to rent rather than own their home as well as their car, furniture o music, delegates heard at Real Asset Media’s Cradle to Grave – Urban Living – The Future of City Living Investment Briefing, which was held in Berlin recently.
The trend is visible across Europe, but the experiences of different countries vary.
The UK has seen a particularly abrupt shift: traditionally a country of proud home-owners, since the financial crisis it has undergone the deepest fall in home ownership in the EU and it now ranks 5th lowest.
There is a lot of scope for improvement, said Clare Thomas, Partner, CMS: ‘The UK market is based on a buy-to-let model, while Europe is further ahead. Institutional investors will have a really positive impact in the UK because build to rent has more professional standards, more consistency and also the scale to introduce technology to enhance the tenant experience’.
In Germany, on the contrary, renting has been the tradition but the country is now grappling with rising demand due to rapid urbanisation and the need to introduce rent controls to ensure affordability.
‘International investors are showing great interest in German residential, but some might be put off by rent freezes in Berlin,’ said Andreas Otto, Partner, CMS. ‘Anything from rent controls to expropriation is being discussed at the moment, but I am confident that no drastic measures will be implemented’.
The rental market is growing in Portugal as well, said Marcos Drummond, Sales Director, VIC Properties: ‘Since the crisis it is more difficult for people to get a mortgage so demand for rental properties is increasing, opening up opportunities for corporate, professional landlords now that laws have been relaxed’.
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