Greystar, the US headquartered international developer and manager, has dubbed European rental housing an ‘all-weather’ asset class.
In a Q4 2020 report on rental housing in the region, Greystar said demand for housing was driven by well-established demographic trends that had prevailed during previous pandemics, and housing markets remained chronically undersupplied. That is because of public policy and credit conditions that remain in place, it said.
The report concludes, ‘We expect the deficit will only be exacerbated by the effect on construction under lockdown. Home price affordability has pushed demand towards rental housing, and this will likely be exacerbated by the pandemic’s effect on savings and credit conditions.’
The company also said the current housing stock and service offering was no longer ‘fit for purpose’, especially with a shift towards working from home and an increased emphasis on wellbeing. ‘For the aforementioned reasons, we firmly believe that rental housing is an all-weather asset class and fully expect it to emerge as the preferred real estate sector coming out of the pandemic.’
Nigel Allsopp, senior director – investment strategy and research, explained the firm’s analysis revealed there were various interlinked ‘gears of demand’ that worked together to drive demand for urban housing.
Those were an increase in the general population, increased demand for housing at the country-level, urbanisation concentrating demand upon towns and cities, and demand splintering into smaller, often single person, urban households.
He said, ‘Most of this growth in urban household formation accrues to rental housing, as home price affordability is a barrier to entry for first-time buyers. As a result, we expect rental housing to overtake mortgaged owner-occupation over the course of the next cycle.’
Mark Allnutt, senior MD – Europe, added, ‘European housing markets are chronically undersupplied with completions failing to keep pace with household formations. Permits are still two-thirds below the previous peak and a third below the long-term average. The current stock is outdated, poorly configured and under-managed with much of it built pre-WWII. It is no longer fit-for-purpose, especially when you consider the shift towards working from home and the increased emphasis on wellbeing.’
