Aberdeen Standard Investments’ new pan-European housing fund has received initial investments of around €350m from eight investors.
In November last year, the Dutch pension fund for metal and technical workers Pensioenfonds Metaal en Techniek (PMT) committed €150m to become the cornerstone investor in Aberdeen Standard European Residential Property Fund.
PMT said MN, its fiduciary asset manager, and Aberdeen Standard had developed the fund strategy together, “anticipating geographical and demographic trends, a high occupancy rate, low leverage and costs, as well as a solid focus on sustainability”.
Aberdeen Standard Investments said today it has received the initial investments of €350m from eight investors in The Netherlands, Switzerland, and Luxembourg.
With further fund-raising planned, the fund is intended to grow to above €1bn over the next five years, it said.
European Residential Property Fund, an open-ended property fund, will invest in the residential sector on a pan-European basis and will focus on the private rented sector (PRS).
The fund expects to buy existing private rental housing blocks and forward-fund the development of new stock to create a portfolio of good quality, sustainable middle-income residential property.
Aberdeen Standard Investments said whilst PRS is the priority, 25% of the total portfolio can be invested in other types of accommodation such as student housing, retirement and nursing homes.
Up to half of the total capital will be deployed in Germany, with the remainder invested across cities in western Europe, including the UK.
The fund will target a net return of 5% to 7%.
Aberdeen Standard Investments global co-head of real estate Pertti Vanhanen, said: “The secure long-term rental streams provided by the private rented residential sector are a good opportunity for investors.”
Rapid population growth in European cities means that supply of good quality rented accommodation is in great demand and this is driving a surge in investor appetite, Vanhanen said.
”By advance-funding some developments, we will help meet that demand while providing accommodation that’s of a decent standard, in locations where people want to live.
“The time is right for Aberdeen Standard Investments to launch this sort of fund. We now have the residential experience, a broad global real estate outlook, local market knowledge, and boots on the ground in 14 European offices to deliver a residential investment product targeting strong, stable returns.”