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Global investors increasingly more interested in housing
29 October 2019 | Ana Tavares

Global real estate investors’ interest in housing is increasing, in particular in Europe, where access to housing is more and more difficult, with some tighter markets showing demand for new formats and concepts.

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The conclusion is from Phillip Wedge-Bernal, Associate Director EMEA Living Research and Strategy at JLL, who was speaking at the 28th ERES Industry Seminar, organized by the European Real Estate Society, which this year took place at ISEG, in Lisbon, under the motto "New trends in international investment in residential property Europe".

In a context of an increasingly wider allocation of capital towards real estate globally, the lack of commercial assets caused investors to diversify their portfolios, and to turn their focus towards housing, a segment which last year had a total 61.000 million euro investment in Europe alone, ranking as the 2nd segment with more investment, behind the office segment.

The focus is on alternative segments such as student and senior residences and healthcare and co-living assets, which are also the segments for which demand has increased the most, as a result of the market’s imbalances. Besides that, more and more investors look into developing assets for the market’s middle segment, because «they are aware that the markets are tight. That trend has already started», guaranteed Phillip Wedge-Bernal.

According to JLL, a large part of investors who still haven’t invested on housing, intend to do it in the short-term, and those who are already investing in it, want to increase their portfolios. As a consequence of this, the rental market is also growing.

Currently, «all countries have attractive opportunities for investors, and Lisbon is one of the global hubs», explained Phillip Wedge-Bernal, at a time when all interested investors look towards cities instead of countries. He believes that «Lisbon and Porto will be very important for this segment, despite the low institutional investment in housing», two cities that have already attracted many investors due to their «safety, universities and cost of living», mentioned Patrícia Barão, Head of Residential at JLL in Portugal, during one of the events’ panels.

José Cardoso Botelho from Vanguard Properties warned that housing growth is dependent on the construction of new offices. The need for legal stability was also pointed out by the participants in this panel as necessary to keep attracting investment.

A period of prosperity that brings challenges

Lisbon is not an exception to the European rule, and currently faces problems in terms of access to housing. The capital, Lisbon, «is going through a period of prosperity which brings challenges such as this one», mentioned Ricardo Veludo, Councilman at the Lisbon municipality during one of the debates.

In Lisbon’s case and from the point of view of the public offer, he considers that «we have the money, but we don’t have the capacity to deliver the product», referring to affordable housing and the current hiatus of the Affordable Rent Program (Programa de Renda Acessível) in terms of the partnership with private entities. That is the reason why he assumed that «we will work so as to change the model and see how the market will react ».

Ricardo Veludo alerted for the importance of the market’s imbalances, which «can lead to a serious systemic risk, in particular for investors and companies», questioning «what can real estate and capital do to contribute towards stability?».