According to a survey carried out by Savills Investment Management and international real estate consultancy Savills, which involved real estate investors with total assets under management (AuM) of over 700 billion euros, 63.8 billion euros should be allocated to the European Living segment in the next three years.
About half of those surveyed (48%) expect the proportion of their AuM allocated to this segment of the European real estate market to increase significantly by 2026. This figure represents an increase on the 41% of respondents last year. 54% expect to have more than 50% of their AuM invested in this sector by 2026, while 41% expect to have more than 75% of their AuM.
According to investor responses, the top priorities are multi-family housing – 84%; PBSA – 63%; Single-family homes – 49%; Coliving – 39%; Private investment in affordable housing – 39%.
It is understandable that investors are focused on the housing sectors and recognize the considerable imbalances between supply and demand and the consequences for growth, as well as the strong underlying drivers of the respective segments. Investors will also be able to focus on the more mature Living segments, namely multi-family and PBSA, says Andrew Allen, Global Head of Research, Product Strategy and Development, Savills Investment Management.
Marcus Roberts, Head of Europe - Savills Operational Capital Markets, says: "The Living sectors became the largest real estate investment market in Europe by 2023 and we expect it to continue to increase its share of total investment in the coming years. Given the volume of capital inherent in the sector and the limited amount of high-quality stock available, investors will continue to compete for the highest quality assets in the best locations. We also expect investors to take advantage of price readjustments for certain assets".
"Portugal has seen strong growth in practically all the Living segments”
Luís Clara, Capital Markets Associate, Savills Portugal, emphasizes that "Portugal has seen strong dynamics in practically all Living segments, especially in student housing, along with the activity of many Senior Living and Flex Living operators. In the last 5 years, investment in PBSA, for example, totaled around 721 million euros, reflecting a clear interest on the part of investors in this market, which has been decisive in leveraging this alternative segment of real estate".
