Nearly two thirds of investors are looking to increase their investment allocation to European Living assets in 2021, a new survey by broker JLL reveals.
The report, which is based on responses from over 40 participants representing around €9.5 tn in total assets under management, highlights investors’ growing appetite for the sector which brings together the five sub-sectors of student housing, co-living, multifamily, affordable housing and healthcare real estate assets.
Living assets made up 13% of asset allocations from respondents, with that set to increase to 21% if full investment ambitions were realised. With only 11% of respondents looking to decrease their allocation to Living assets, the hunt for suitable stock to invest in is becoming increasingly competitive.
While investors are determined to increase their allocation to the sector, 78% have identified a lack of suitable product as being a major barrier to accomplishing this. In addition, respondents to the survey do not see the supply and demand balance of investment-grade opportunities improving in the near term.
‘The European Living investment market spans a vibrant and varied range of opportunities. Across at least a dozen countries, investors are increasingly finding the chances to deploy capital to meet their needs within Living sub-sectors,’ said Jeremy Eddy, head of Living, International Capital Markets, EMEA, JLL. ‘The last 12 months has seen an acceleration towards Living investment, as owners look to reposition portfolios, pour new capital into the sector, and take advantage of the benefits Living has to offer. More a wave than a ripple, investment activity is simultaneously both targeting well-trodden deal paths, as well as moving beyond to reach the diversified opportunities Living represents.’
While only 8% of respondents have exposure to all five sub-sectors of Living assets, JLL’s forecast expects this to grow to 27%. Clearly there is a substantial shift towards diversifying investments in the Living sector, and investors will be growing operational expertise to meet these ambitions. Not only are investors looking to diversify within Living assets, but nearly two-thirds (63%) of respondents said they are looking to expand to at least one additional market.
The full report is available here
