Prospects for the residential market in Europe and for rental properties in particular, are positive, Britta Roden, Head of Research, KGAL, told Real Asset Insight.
“We’re seeing a lot of investment potential in the living sector”, she said. “The cost of living is increasing in almost all European countries, so households will rather rent than buy property. We expect the tenant market in the multi-family segment to increase in all the European countries KGAL is active in”.
It is a difficult market environment with rising interest and uncertainty over where yields are going to be six months from now, but prospects for residential are positive.
“This is a trend that goes far beyond the current interest rate environment and it goes beyond the yield correction”, Roden said. “We are expecting this strong tenant market to be a mid to long-term trend, and this sets the stage for good investment decisions, providing the multi-family housing that the markets need”.
Equity investors will have the upper hand. “If you’re independent of financing requirements you have a competitive edge”, she said. “If you see interesting investment opportunities in this market environment and you have the equity ready to go you will have a first mover advantage”.
KGAL expects a normalisation in the interest rate environment, which will make financing conditions easier in 12 months’ time, and sees opportunities in all real estate sectors “provided you look very carefully”.
Residential is likely to be the most stable asset class going forward, but despite the gloomy headlines there is a lot of potential in the office sector “because you can buy office properties at a nice discount now if you have the equity”, Roden said. “The retail market is going through some structural changes which also offer new
opportunities and then of course there are investment opportunities in sectorsthat so far have been niche markets like senior, student housing and life sciences that will give you a stable return”.
Please click on the video above to watch the full interview or listen to the podcast below.