Investors are ready to help solve Europe’s housing crisis

The housing crisis is expected to keep accelerating over the next five to ten years and one of the questions most asked by investors is how to provide solutions, says CBRE Investment Management director, European research, Alex Lund,

Real Asset Insight caught up with Lund at the recent ULI Europe conference in Madrid when he said that while governments need to provide immediate solutions, they do not think in the 10-year cycles that real estate investors do. Regulation is going to be required, “but if it is sensible regulation and we can understand it, we can price it in.” That will be acceptable to investors, he said.

Ultimately, Europe will need alternative housing solutions with denser, taller buildings. “We’re starting to see that in some markets: Copenhagen is a good example of that.”

The Danish capital has smaller apartments in more tightly fitted spaces. “It’s going to have to be a fact of the market to ensure affordability continues.”

Build-to- rent, multi-family real estate currently accounts for 80-85% of investor activity. “What we’re seeing now is new entrants coming into the student market and into the senior market. What it offers is a different risk-return dynamic, there are differing levels of maturity across continental Europe and across the UK as well.”

Lund said student housing in the UK is probably further ahead than in continental Europe and is similar to that in the US.

“In continental Europe that product is more immature and there are strong growth fundamentals in the sector.”

He said that student housing ought to cater for domestic, non-local demand as well as for the international market because they are looking for security, is close to a university and is affordable.

“If we can provide that as investors then we’re solving a number of problems.”