The latest European Living Sectors Investor Survey, published by global property consultancy Knight Frank, reveals that investors in the Build to Rent, student housing, and senior housing markets across Europe are planning to increase their exposure and activity over the next five years.
Knight Frank surveyed 44 institutional investors currently active in the European Living sectors – who combined have a total of €70bn in residential assets under management across the continent. Results revealed that collectively respondents planned to commit an additional €151bn to the European Living sectors by 2027. This represents a 115% projected increase compared to the €70bn currently invested.
75% planned to ‘significantly increase’ their total investment over the next five years, with 25% confirming that this would represent a doubling of current investment volumes. Knight Frank found that 32% of survey respondents are currently active across all three Living sectors, while 53% expect to be active across all three within the next five years.
“The growth of the European Living sectors continues at pace. The findings from our latest survey confirm that investor appetite for Europe’s student housing, multifamily and senior housing markets is insatiable. The Living sectors perform robustly during times of economic turbulence. As we face a potentially challenging macroeconomic backdrop next year, investors are looking to increase their exposure in counter-cyclical sectors with defensive dynamics.”Stuart Osborn, Head of European Residential Investment, Knight Frank
According to Knight Frank, the Living sectors have accounted for 22% of all European commercial real estate investment in 2022 to date. This section of the CRE market has consistently increased its share of total investment for seven consecutive years; in 2015 it ranked third behind offices and retail. Today, the Living sectors capture the second largest share of total European investment volumes – behind offices.
The survey also revealed that 63% of respondents agreed that European Living sectors would outperform all other types of real estate in 2023, citing significant supply/demand imbalances and inflation hedging as key reasons.
“Whilst investor interest in Living assets across Europe remains strong, current macroeconomic and geopolitical pressures mean activity will remain subdued in the final quarter of the year before picking up in the first half of 2023. Crucially, the occupational side of the market continues to perform well. Wherever you look there are quite severe imbalances between supply and demand as populations age, student numbers rise and housing affordability worsens – this will underpin investment activity.”Oliver Knight, Head of Residential Development Research, Knight Frank