European investors are planning significant increases in their living sector allocations, with €64 billion of new capital for deployment into the build to rent, affordable housing, student property and seniors housing sectors over the next five years, according to a Knight Frank survey.
The survey covers the views of 55 leading investors that together have over €98 billion in living assets under management.
Single family housing emerged within this year’s report as a major growth area, with 54% of investors planning to have exposure to the sector by 2029 – up from 31% currently. Meanwhile, purpose-built student accommodation ranked as the most appealing investment prospect over the next five years, followed by multifamily housing.
ESG considerations continue to drive investment decisions, with 69% of respondents citing investors as 'important' or 'very important' in dictating their ESG approach. This is higher than both regulatory change (65%) and tenant demands (52%).
“As we continue to see further European Central Bank rate cuts, we expect activity to pick up significantly in the coming months. While challenges around regulation and affordability remain, the strong fundamentals underpinning occupational markets continue to attract investment,” says Stuart Osborn, Head of European Living Sectors Transactions at Knight Frank.
London, Madrid and Berlin are top locations for investors, while Dublin, Milan, Amsterdam and Barcelona also feature in the wish list for residential projects, according to Katie O’Neill, Associate in the Global Living Sectors research team.
The research further shows a marked improvement in debt market sentiment, with 60% of respondents expecting their requirements for debt to increase in the coming 12 months.
“As financing costs become more accretive, we expect to see a pickup in transactional volumes in the next 12 months as investors look to deploy the substantial capital they have earmarked for the sector,” explains Lisa Attenborough, Head of Debt Advisory at Knight Frank Capital Advisory.
