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European residential investment doubles in the last ten years

PATRIZIA publishes 10th PATRIZIA INSIGHT study on European Residential Markets.

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  • Every fifth Euro of European real estate investment invested in residential sector
  • Urbanisation to create winning and losing cities, with more losers than winners
  • Supply of new housing stock stabilising the market more than expanding it
  • Megatrends aging and urbanisation remain demand driver

Augsburg, October 08 2018. PATRIZIA Immobilien AG, the pan-European real estate investment manager, has launched its tenth PATRIZIA INSIGHT study on the European Residential Markets. The findings show that every fifth Euro of European real estate investment is invested in the wider residential universe, an increase of more than 50% during the last 10 years.

Dr Marcus Cieleback, PATRIZIA’s Chief Economist and author of PATRIZIA INSIGHT, explains: 
“Over the last decade the European residential market has undergone significant change. Today residential investments are made in a truly Pan-European context and well-known megatrends, such as aging and urbanisation, combined with the hunt for stable income streams by institutional investors, are increasing demand even further.

“We expect residential investments to remain high on the agenda for institutional investors. However, the ongoing strong investor interest in residential properties has resulted in a shrinking supply of institutional quality assets available for purchase. This means that the importance placed on local expertise and experience in investment strategies across the risk spectrum, including development activity, is increasingly important.”

Key INSIGHTs:

  • Solid employment growth continues to support a positive residential market outlook with average real price growth of circa 4% in 2017, well above inflation 
  • Attraction of residential universe set to grow even further due to strong demand drivers across Europe, including aging and the trend of urbanisation
  • Urbanisation to create winning and losing cities with the number of winners smaller than number of losers as only a third of European regions are expected to witness working population growth
  • Supply of new housing stock stabilising the market more than expanding it as current level of construction equates to 0.7% of stock
  • Demand to continue to exercise upward pressure on rental income, supporting residential capital values
  • Given high demand and low supply, housing development remains an attractive option across Europe, particularly for IRR driven investors
  • For European buy-and-hold multi-family housing strategies total returns in the range of 5% to 7% p.a. in the next five years can be expected. Capital growth will contribute between 2.0% and 3.0% p.a. to this.

A full copy of the PATRIZIA INSIGHT report can be found here.

PATRIZIA Immobilien AG:
PATRIZIA Immobilien AG has been active as an investment manager in the real estate market across Europe for more than 30 years. PATRIZIA’s activities include the acquisition, management, repositioning and sale of residential and commercial real estate through its own licensed investment platforms. As a global partner for pan-European real estate investment, PATRIZIA operates as a respected business partner of large institutional investors and retail investors in all major European countries. PATRIZIA manages almost EUR 40 billion of real estate assets, primarily as an investment manager for insurance companies, pension fund institutions, sovereign funds, savings and cooperative banks and as co-investor. For further information, please visit: www.patrizia.ag.

Contact:
Andreas Menke    
Group Head of Corporate Communications    
Phone: +49 (0) 821 5 09 10-6 55    
press(at)patrizia.ag

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