It is the right time to invest in the resi market, experts agreed at Real Asset Media’s European Residential Investment briefing, which took place last week at EXPO REAL in Munich.
“Some investors are waiting for prices to fall further, but we believe now is a good time to get back in the market,” said Marius Schöner, managing director, head of residential EMEA and country manager Germany, CBRE Investment Management. “This is why we´ve been very active this year.”
The occupier market continues to be rock solid as demand for residential keeps growing, but what has changed is that higher financing costs and price pressures have created opportunities in the market.
“Rising construction costs and the economic crisis have led to pockets of distress,” said Karin Koks, managing director, portfolio management, Greystar. “Developers are running into problems with their financing and there are opportunities to be exploited. This is absolutely the right time to build a resi portfolio and there’s no reason to wait.”
The fundamentals for resi are as strong as ever, it is also a good inflation hedge and the urbanisation trend works in the sector’s favour.
“Our in-house research shows that rental growth is so strong that it’ss offset the cap rate movements,” said Koks.
There are some big deals happening, like CBRE’s acquisition of a 1,350-unit residential portfolio from Vonovia for €560 million, but also a lot of smaller deals being done, as family offices are very active in the market.
International capital is also looking at possible opportunities in Europe.
“As the market corrects, sellers are adjusting their pricing expectations,” said Koks. “We recently stepped in, took the leasing risk and acquired a beautiful, 650-room PBSA scheme near La Défense in Paris.”
There is activity also at the value-add end of the spectrum. “Some investors are hesitant about when is the right time, but many others are very keen to build their own portfolio now, choosing and buying asset by asset, rather than acquiring a ready-made portfolio,” said Kashee Ramalingum, global director of real estate, LifeX ApS.