PATRIZIA forecasts residential investment resilience despite geopolitical volatility


The 11th PATRIZIA INSIGHT study on the European Residential Markets shows that despite today’s more volatile geopolitical and economic environment residential investment is forecast to continue offering resilient returns for investors.

Total unlevered returns of between 5 per cent to 6.5 per cent per annum are expected over the next five years, of which 2.5 per cent to 3.5 per cent is expected to be income.
 
In the absence of a Europe-wide professional benchmark index, PATRIZIA has undertaken its own bespoke analysis of the European rental cycle data using online portals and other market sources. PATRIZIA’s research shows that since the millennium, rental income has remained on an upward trajectory and displayed low volatility throughout the Global Financial Crisis (GFC), underpinning the fact that the multi-family asset class remains a stabiliser for any portfolio.
 
Dr Marcus Cieleback, PATRIZIA’s Chief Economist and the author of the study, says: “The trend of urbanisation is here to stay, with population growth and, as a result, future housing demand surpassing macroeconomic or political volatility. Our latest European residential research demonstrates that multi-family assets continue to offer institutional investors an attractive investment product.
 
“Many cities are struggling to meet the challenges of urbanisation with some governments responding with rent limits. However, history teaches us that this can negatively impact the quality of stock and, ultimately, the supply of rental housing. Despite this, we expect residential investments to remain high on the radar of institutional investors as an asset class that offers cash-flow stability and diversification.
 
“Liquidity across many of Europe’s major urban areas has increased demonstrably since 2009, reflecting the maturing nature of this asset class and the vast number of opportunities available to investors. Sophisticated demographic analysis shows that the investible market for residential, at 25 per cent of the European territory is quite significant. And so with such an opportunity, expertise and experience are absolutely critical to being able to identify institutional, quality products."

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