Invesco Real Estate has received €140m seed capital for a newly created open-ended European residential real estate fund.
The global manager has announced the launch of the Invesco Real Estate European Living Fund and the initial capital raise from three unnamed German institutional investors and said it also expects a further €80m of commitments to be finalised over the next six months.
The fund, which intends to have €500m worth of assets within the next two to three years, is in talks to buy €110m worth of properties in Italy and France, Invesco said.
The fund targets a 4% per annum gross income return and 5.5% to 7.5% gross total return.
As well as investing in apartment buildings for rent, the fund expects to also target micro-apartments, student housing and single-family homes for rent.
William Ertz, senior fund management director at Invesco Real Estate, said: “European residential investments have shown outperformance compared with other asset classes in the long-run, whilst showing less volatility and they have also proven to be especially crisis-resistant with a high degree of income stability.
“In our view, the outlook is positive as the fundamentals are still good in metropolitan areas: an undersupply in main cities, long-term housing supply/demand imbalances, and an historical high gap to government bond yields.”
Robert Stolfo, MD, client portfolio management at Invesco Real Estate, said: “Investors have an increased demand for stabilised returns and already confirmed their appetite for the residential sector’s attractive potential with a €140m commitment at its first close, further capital commitments of €80m are already in due diligence.
”Continued investment in this sector means that European residential as an asset class has seen material growth in both liquidity and scale over the past few years. This momentum is likely to escalate further as additional European countries attract inward investment.”
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