Investments in European housing accelerate

The rate at which institutional investors are buying up housing is accelerating in major European cities, leading to higher house prices, according to research.

In Europe, the volume of purchases hit €64 bn 53 bn in 2020, with about €150 bn worth of housing stock conservatively estimated to be in the hands of such large investors.

Berlin, with €40 billion worth of housing assets in institutional portfolios, double the value found anywhere else in Europe, is ranked as the top of the league table, followed by London, Amsterdam, Paris and Vienna, according to analysis of the Preqin private database of investors, funds and large transactions.

According to the research done by Daniela Gabor, professor of economics and macrofinance at the University of West of England and Sebastian Kohl at Berlin's Free University, Europe s housing has become an increasingly attractive asset class for investors due to near-zero interest rates and an encouraging regulatory framework.

In 2021, real estate funds in the Eurozone reached €1 tn, the size of Spain's GDP, from around €350 bn in 2010, according to European central bank data. Residential assets are an increasingly important part of that.

Between 2012 and 2021, the number of major residential transactions involving institutional investors increased from 16 to 92 Denmark two to 13 and the Netherlands two to 60. Private equity company Blackstone, the world's largest institutional landlord, manages about $730 billion in funds, with $230 billion allocated to real estate in September 2021. Blackstone, which posted record profits in October 2021, owns 65,000 residential units in five European countries.

A Blackstone spokesman said that the firm believed that it played a positive role in addressing the chronic undersupply of housing across the continent by investing hundreds of millions of dollars to improve properties for tenants.

Blackstone owns tens of millions of rental properties in Europe. Given our ownership levels, we have no ability to impact broader rent trends and anyone suggesting that a small player could influence rental rates is engaging in a wilful misunderstanding of how the market works.

We are proud to be responsible for the custodians of rental housing and we are committed to our residents, which is why we have implemented programs to help residents facing financial difficulties. With countries across Europe facing the squeeze due to high rent, property prices and energy costs, the role of institutional landowners in the housing market is increasingly becoming a target of public anger.

The Irish government tried to discourage house purchases by increasing stamp duty to 10% on the purchase of more than 10 houses last year.

Spain s leftwing government wants to ban the sale of social housing to investment funds and impose rent controls.

In a referendum last year, the residents of Berlin voted to take over public ownership of homes owned by private real estate companies with more than 3,000 housing units.

Kim van Sparrentak, a Green MEP, said that this study shows how large investors are playing Monopoly with their homes, instead of providing a place to live.

The EU needs to play its role in ensuring affordable housing as a fundamental right and that the housing crisis is not just about building more housing. The EU rules are facilitating this trend instead of addressing this problem. We need strict regulations to prevent large investors from taking over our housing stock. The failure of the EU and national governments to tax the wealthy is facilitating the transfer of funds to pension funds and insurance companies whose businesses have been boosted by the withdrawal of the welfare state, it is claimed.

The report says that low interest rates have encouraged investors to look for yield outside traditional assets, such as government bonds, and to move into new asset classes, including housing.

More than 4,000 institutional investors directed a total of $136 tn of their $136 tn assets to European real estate in August 2021, according to Preqin data. 1,325 investors held residential assets in their portfolios. The value of real estate portfolios that include housing was said to be about $2 tn.