Although institutions are currently increasing their allocations to residential assets they are frequently frustrated when trying to deploy capital because of difficulties accessing sufficient stock.
“Currently there’s huge amounts of allocation to residential by the institutional world but they are only able to access about 2% of the ready market because only 2% of the resi market is multi-family stock and the built-to-rent type of opportunities,” says Samantha Kempe, chief investment officer at Immo Capital.
Talking to Real Asset Media’s Richard Betts she pointed out that 98% of the market is individual apartments or individual houses, or single family residences (SFR). Traditional manual processes have made such assets impossible to aggregate into portfolios of scale. However, with the extensive use of sophisticated technology it is possible to remove those inefficiencies and generate large SFR portfolios.
A further benefit is that it is also a more sustainable model.
“Rather than constantly building new homes and creating all of those associated carbon emissions that come with construction processes, we’re taking existing housing stock that’s often been under invested for many years by unprofessional landlords and we’re making it fit for purpose for consumers,” Kempe added. In social terms, it is also less likely to dislocate communities, she pointed out.