Annual inflows into the living sector across EMEA could grow to €70bn-€85bn (£60bn-£72bn) over the next five years, helped by improved pricing alignment between buyers and sellers and a more favourable interest rate outlook across Europe.
Investment into the sector has fallen for the past two years, dropping to €35bn last year from a high of €100bn in 2021, when the living sector accounted for 32% of all deals in Europe.
But a survey by Cushman & Wakefield last month of institutional investors responsible for €1.4tn of assets globally found that almost 80% expect the amount they invest into the living sector to increase over the next five years.
“We believe that this has the potential to translate into average inflows of €70bn-€85bn per annum into the living sector across the EMEA region over the next five years,” it said.
Fifty-three per cent of those surveyed already allocate more than 20% of their EMEA portfolio to the living sector – up from 6% in 2007.
The report added: “From a structural perspective, it is clear that investors recognise the strong growth potential for the sector. While the private rental and student accommodation segments remain the most active segments currently, investor interest continues to broaden into segments like social/affordable housing and senior and co-living which we expect to grow and mature over the medium term.”
The UK and Germany are the top two preferred geographic markets.
The private rental sector and purpose-built student accommodation have dominated activity to date, but the research found growing interest in diversifying into social housing, affordable housing, co-living and senior living investments.
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