Mipim: supply shortages and demographics underpin living sector investment outlook

Europe’s living sector continues to attract investor interest despite challenging capital market conditions, supported by strong demographic demand and persistent housing shortages, industry leaders said at Real Asset Media’s session “European Living: Sectors, Investment and Returns” at the INSIGHT Stage at Mipim in Cannes on Thursday.

The panel — moderated by Richard Betts, group publisher at Real Asset Media — featured Rainer Nonnengässer, managing director at OmniLiv; Jill Xiaozhou Ju, founder and chief executive officer of True North Management; and Paul Hohenstatt, chief investment officer at Prop.com.

Speakers said that while macroeconomic volatility continues to affect capital markets and development activity, the structural drivers behind the living sector remain intact across much of Europe.

Nonnengässer said that despite recent global disruption, the underlying investment case for living assets has remained resilient.

“Bottom line, I think the key fundamentals have not changed dramatically, and the trades are where they are. Some of the asset classes are still suffering from missing investment sentiment, whereas everything that is related to beds, especially in continental Europe, is highly sought after.”

He added that global investors are actively seeking opportunities in the sector following the repricing of real estate markets over the past three years.

“We see a lot of investors’ appetite currently from the US, from the UK. So, everybody who has had an angle in PBSA in previous times is currently trying to make beneficial moves from the great financial reset — how colleagues in the UK call it — three years ago.”

Demographic shifts and changing lifestyles continue to underpin demand across multiple living formats, according to Ju.

“From an underlying demographics perspective, I’d say the trend continues, and helps us to navigate through all the ups and downs of the capital markets. I think if you’re in the living sector, [you cannot] look at a 12-month horizon, [you must] look at a five- to ten-year horizon to really be able to sail through all these ups and downs that are happening in the interim.”

She added that evolving work patterns and lifestyle preferences are expanding the appeal of co-living and flexible residential formats. “Ultimately, how ever much money you make and whatever age [you are], as long as you want flexibility, you want convenience.”

She said co-living and micro-living offer a flexible housing model that traditional residential markets often fail to provide.

Supply shortages remain particularly acute in Germany, where Hohenstatt said a significant gap between supply and demand continues to support rental growth.

“Particularly when you look at the German market, there’s a lack of 800,000 living units, especially in the micro-living sphere.”

Limited provision of specialised housing products across Europe is also contributing to rising rents. “And then we see this as a result in rising rents. Rents have been increasing by 6% on average across all of the micro-living areas, which is tremendous. And I think that creates good opportunities.”

Hohenstatt said improving capital market conditions and narrowing pricing gaps between buyers and sellers could help support transaction activity in the coming year. “And I think we’re in the beginning of a cycle. So, I’m quite optimistic what 2026 will bring.”

Panellists also highlighted the role of refurbishment and repositioning strategies in addressing supply shortages, particularly as development activity has slowed due to higher interest rates and construction costs.

“For two and a half years now, there has been a massive dip in new completions in the residential sector [across all types],” Nonnengässer said.

Despite these challenges, the panel agreed that long-term demographic trends, urbanisation and structural housing shortages continue to provide a strong investment case for the European living sector.