Institutional ivestors are expected to more than double their assets under management in the residential property sector over the next five years, according to Knight Frank’s annual European Residential Investor Survey.
Some 91% of the respondents which account for €64 bn in residential assets, said they plan to significantly increase their allocation of residential assets over the next five years. In particular, the group of investors plan to invest a further €19.5 bn in 2022 and €87.5 bn over the next five years.
According to Knight Frank, the year-to-date investment total now stands at €50 bn, with Knight Frank expecting investment volumes to end the year at a record level.
‘Ten years ago, the residential sector only accounted for 10% of all European acquisition activity,’ said Stuart Osborn, head of European residential investment transactions at Knight Frank. ‘The uptick in investment volumes is representative of the growing and long term trend in investor confidence in residential assets. The defensive characteristics of the sector itself, which have been particularly magnified in the last 18-months, have fast become a key rationale to the growth of the sector in investor’s real estate portfolios.’
Osborn added: ‘Lack of suitable investment opportunities across the residential sectors, particularly income producing product, continues to intensify investment demand and we see this continuing well into 2022, and beyond as the sector continues to develop.’
Knight Frank’s survey also found that, currently, just 18% of investors are active across all residential investment sectors in Europe. However, this figure is expected to rise sharply to 45% by 2026.
The survey respondents identified the countries in which they saw the best prospects for investment over the five years; 19% said Germany, 17% the UK and 14% said Spain. Newer markets, including Italy, Ireland and Poland, also featured highly.
Some 55% of respondents indicated that they believed the residential investment sector will outperform all other real estate sectors in 2022. When asked which residential sector was most likely to outperform in 2022, respondents said student accommodation would narrowly beat the multifamily and single family rental markets.
‘Considerations around ESG have risen up the agenda, with sustainability credentials now front and centre of business decisions,’ said Oliver Knight, head of Residential Development Research at Knight Frank.
