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Residential attracting record levels of investment in 2021

The residential sector has consistently outperformed during the pandemic because it offers investors security and diversification, delegates heard at Real Asset Media’s European Residential & Affordable Housing Investment Briefing, which was held online yesterday.

Mark Holz, group head of research, Corestate Capital Group

“Resi is on every investor’s radar screen now,” said Mark Holz, group head of research, Corestate Capital Group. “In 2020 it attracted a quarter of all investments in real estate, while before it was 15%. This year it has reached 28%, the highest it’s ever been.”

This performance is remarkable given the context: in Q1 this year total investment volumes declined by 28%, but resi grew by 46%.

“The reason is that investors want security and resi offers secure income,” Holz said. “It is also highly diverse in terms of rental structure.”

Resi also offers diversification and multiple opportunities to invest in mixed-use, combining resi with other asset classes. It’s become less of a stand-alone investment, in line with current market and social trends.

Residential stands out as a safe haven

At a time when there are question marks over the future of other sectors like retail and offices, residential stands out as a safe haven.

“Having a home is a basic human need and that’s why the wind continues to blow so favourably in our direction,” said Xavier Jongen, managing director European residential, Catella. “More capital is flowing into the sector, which is seen as a safe niche to invest in at the moment.”

Manfredi Catella, CEO, Coima.

“Now the key word is integration,” said Manfredi Catella, founder and CEO, Coima. “Investors used to want to know which asset class they were investing in, but asset classes are no longer separate like silos. It’s all about integrating different types of resi with co-working, last mile logistics and retail and about integrating buildings and communities.”

Coima has first-hand knowledge of this, as it is playing a crucial role in the regeneration of Milan, first with the Porta Nuova district and now with the Porta Romana project.

“The uses of buildings are becoming more hybrid but we are also paying more attention to what is happening on the ground level, both inside and outside the buildings,” said Catella. “It’s about activating the public realm.”

At Porta Romana, the disused railway yard close to the city centre is being transformed into a mixed-use urban scheme, half of which will be residential. It will permanently re-connect two parts of the city that had been divided for decades.

“The pandemic has been a massive tragedy which has caused discontinuity,” said Catella. “But it has also accelerated the drive towards a goal and the desire to understand the fundamentals and create something of long-lasting value”.