€151 bn of new capital heading for European living sectors

Investors in the student housing, multifamily and seniors housing markets across Europe are planning to significantly increase their exposure and activity over the next five years, a recent survey carried out by advisor Knight Frank has revealed.

Surveying 44 institutional investors currently active in the European Living sectors who together have €70 bn in residential assets under management across the continent, Knight Frank found that collectively the respondents planned to commit an additional €151 bn into the European Living sectors by 2027. This represents a 115% projected increase compared to the €70 bn currently invested.
 
Around 75% of investors planned to ‘significantly increase’ their total investment over the next five years, with one quarter (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.
 
Stuart Osborn, head of European Residential Investment at Knight Frank said: ‘The growth of the European Living sectors continues at pace. The findings from our latest survey confirms that investor appetite for Europe’s Student Housing, Multifamily and Seniors 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.’
 
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 – only behind offices.
 
In Knight Frank’s investor survey, 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.
 
Oliver Knight, head of Residential Development Research at Knight Frank, added: ‘While 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.’

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