EUROPE – Invesco has hired Grosvenor head of residential John German to spearhead its planned entry into the European residential market but says it has no plans to launch a dedicated residential fund.
Although Invesco is already active in US multifamily, this will be its first foray into the European housing market – specifically the still fragmented UK market.
Simon Redman, managing director for Europe, said: "We're prepared to invest to create an opportunity if we can. We don't want to invest as a generalist and get it wrong.
"We're not piling into overpriced markets. Residential isn't just residential – just like commercial, it has nuances."
Potential investments include build-to-rent developments, although Redman said the fund manager was also looking at other opportunities in the UK.
"We're seeing global investor demand for an asset class that is very much in focus," he said.
"In the UK, there's strong government support for institutional investment in residential and attractive yields.
"At the same time, demographic changes driving the growth of the rental market had created opportunities to build a better product.
"If you're leasing a property, you'd prefer to deal with a landlord with scale rather than an independent landlord with no strategy.
He also hinted the manager could target assets usually grouped with long-lease alternatives, including social housing, ground rents and student accommodation.
But although Invesco has identified a role for long-lease strategies, Redman said its residential strategy would include sufficient flexibility to "access the spectrum".
Redman said it was too early to think about launching a fund – German has in the past managed two residential vehicles – but that residential would create a diversifier to mainly commercial mandates from existing clients.
"It isn't suitable for all mandates, but we're in the unusual position of being able to offer the option with expertise," he said.
