EXPO Real: Resi set to defy negative market pressures

Rising costs will not detract from the desirability of resi investments, delegates heard at Real Asset Media’s European Residential Investment briefing, which took place at the International Investors’ Lounge at EXPO Real.

“The underlying fundamentals of the residential market are strong and will remain strong,” said Mark Kuijpers, managing director, central Europe, Greystar. “We’re a value-add player and do our own developments, so even in volatile markets we can find opportunities and find value.”

The gap between supply and demand is what drives the resi market across Europe.

“There is still a huge imbalance in all European countries, due to continuing high migration into the main cities,” said Rainer Nonnengasser, executive chairman, International Campus. “Rents are rising and there is a strong shift to smaller size apartments to keep costs down. Younger people are moving out of student accommodation and want to keep their links with their peers and their communities, which is driving micro-living.”

Another trend that is driving demand is that young families now tend to stay in the city rather than move out, he said.

Given the difficult economic situation accommodation costs are becoming more of an issue that investors must keep in mind.

“Affordability has become a crucial factor,” said Christian Fladeland, chief investment officer, Heimstaden. “We’re seeing high rental growth but we must be mindful of the macro-economic context.”

The challenging economic situation also means that more people are looking to rent rather than buy and that’s another factor driving the market.

“CEE is also seeing a real transition from traditional ownership to a rental market,” said Agata Jurek-Zbrojska, partner, head of real estate and construction, CMS. “This trend will only increase in the next few years, even if CEE is in a good position compared to other parts of Europe because the growth trajectory is still positive.”

Despite inflation and interest rates going up and general uncertainty in the market, the resi sector is still attracting considerable attention.

“After an incredible 2021, EU resi investment markets have remained stable in H1,” said Markus Arnold, CEO and sole owner, Arnold Investments. “The share of international investors is returning to pre-pandemic levels after a significant drop in the last two years.”

Read the EXPO Real daily coverage here in the EXPO Day, produced at the event by Real Asset Media.