European residential real estate markets offer attractive opportunities – lack of supply remains key driver of returns
Webinar by a.s.r. real assets, CapMan Real Estate, KINGSTONE Residential Investments and Savills Investment Management highlights perspectives in Germany, the Netherlands, Scandinavia and Spain
European residential real estate markets continue to offer attractive investment opportunities for institutional investors. Despite different regulatory frameworks, the markets under consideration, Germany, the Netherlands, Denmark, Sweden and Spain, are united by a structural excess demand combined with insufficient housing supply. This ensures rising rents and stable, positive return prospects in all countries. This is the conclusion reached by experts from a.s.r. real assets, CapMan Real Estate, KINGSTONE Residential Investments and Savills Investment Management during a joint webinar on the European residential real estate market.
Mikael Hjorth, Fund Director at CapMan, says: "In the Nordic markets, new construction activity has declined significantly since 2022 and is now well below actual housing demand. This creates additional pressure on rent development. Residential real estate continues to be one of the most sought-after asset classes in Scandinavia. We see attractive long-term growth prospects in the large metropolitan regions in particular."
Robbert van Dijk, Fund Director at a.s.r. real assets, comments: "The Dutch housing market is benefiting from continued high demand from institutional investors. The rental trend remains positive, mainly due to the high demand for affordable rental apartments and limited new construction activity. For long-term institutional investors, the market therefore continues to offer stable and attractive earnings prospects."
Simon Lieb, Managing Director of KINGSTONE Residential Investments, explains: "In Germany, the demand for affordable housing remains high. At the same time, high construction costs, financing costs and regulatory requirements make it difficult to create new apartments. Subsidised and price-controlled housing in particular is therefore developing into an independent and increasingly attractive asset class for institutional investors."
Fernando Ramírez De Haro, Head of Spain & Portugal at Savills Investment Management, says: "Spain is experiencing a significant excess demand. Every year, significantly more new households are built than apartments are completed. Long-term investments by institutional investors make an important contribution to alleviating the shortage. From an investor's point of view, we see particularly attractive prospects not only in Madrid, but also in dynamic cities such as Valencia and Málaga."
The discussion also showed that geopolitical uncertainties and short-term interest rate fluctuations have so far had only a limited impact on residential real estate markets. Residential real estate continues to benefit from its defensive characteristics and the high demand for housing. The experts cited insufficient new construction activity in all markets as the biggest challenge, which is further exacerbating the structural supply deficit.
