EXPO REAL 2026: Regulatory uncertainty threatens investment needed to tackle housing shortage

Speaking on the second day of EXPO Real, panellists warned that unpredictable housing regulation risked deterring the private investment needed to address Europe’s residential supply shortage. Investors could accommodate rent controls and other restrictions, they said, provided the rules were clear and remained stable.

The warning came during Living Sector Part 2 – Investment Trends and Opportunities, a session hosted by Real Asset Media on Tuesday and moderated by Ron van Bloois, a board member of the company.

Stefanie Kern, partner at CMS, the international law firm, said regulation affected both construction costs and rental income, with fragmented requirements complicating investment across countries and regions.

“We all can deal — or I think business can deal — with regulation. Business cannot deal with uncertainty,” she said.

Kern argued that policymakers should reconsider whether individual regulations remained necessary and achieved their intended purpose. Rent regulation needed to be assessed against its effect on the delivery of new homes, while greater harmonisation could make international investment easier.

Frank Aalbers, EMEA residential asset operations lead at CBRE Investment Management, the global real assets investment management firm, said knowing the rules in advance allowed investors to incorporate them into underwriting.

“So, as long as we don’t change the rules during the game, it’s fine, because I can price it in, in the underwriting.”

He said the manager deployed core and core-plus capital and did not base its investment assumptions on aggressive rental growth. Rent regulation itself was therefore manageable, provided investors understood the framework they would face.

Lisa Pfisterer, fund manager of the Aberdeen Pan-European Residential Fund at Aberdeen, the global specialist asset manager, also identified uncertainty as the central problem.

She contrasted Finland, where she said sufficient supply reduced the need for intervention, with Sweden, where a highly regulated market nevertheless offered investors predictable rules and liquidity.

“But the thing about uncertainty is really destroying our business plans.”

Pfisterer said private capital should help address the imbalance between housing supply and demand, but uncertainty in some countries risked discouraging investors from entering the sector.

Andrew Allen, managing director in real estate investment banking advisory at Newmark, the commercial real estate advisor and service provider, said Europe’s housing shortage could not be resolved without private investment.

“There is no chance that the housing supply issues that Europe, including the UK, has will be changed unless we are very pro-investment, meaning from the private sector.”

Allen acknowledged that regulation reflected the importance of housing people appropriately. Shortages and rising rents encouraged political intervention, but stable policies were necessary to attract the capital required to increase supply.

Offering his personal view, Allen argued that housing policy should be set at the highest European level, drawing parallels with strategic infrastructure planning and monetary policy committees setting interest rates.

The discussion also highlighted the operational pressures facing residential investors. Aalbers said improving net operating income required a stronger understanding of residents, better operations and consideration of additional income from services and amenities.

“But if you don’t understand who’s living with you, how do you manage these assets in a way that they’re happy then? Because if you want to have happy tenants, you need to understand them.”

Pfisterer agreed that investors could no longer rely on yield compression to improve returns. Digital letting and contracting processes, alongside energy efficiency, could help control costs, particularly in student accommodation where all-inclusive rents left owners exposed to rising expenses.

“So definitely, I would say, going forward, the operational component is the driving factor to improve returns.”

Asked about opportunities over the next five years, Kern selected affordable housing for middle-income households, while Aalbers highlighted affordable living for seniors. Pfisterer favoured diversification across residential segments.

Allen returned to the challenge of funding development at sufficient scale, arguing that the sector needed more imaginative approaches to assembling equity and debt.

“We need some new imaginative ways to do that at real scale to solve the problem that is colossal.”