Living takes largest share of real estate investment in Europe

London, 9 August 2023 – Investment in European living assets exceeded all other real estate assets classes in the second quarter at €10.6 billion, new figures from JLL reveal.

The combined sub-sectors of multifamily, student and healthcare accounted for 32% of €32.7bn direct real estate investment, excluding development and corporate acquisitions. This is the highest proportion since JLL began tracking the sector in 2006.

Total capital transacted in living rose 20% from Q1 levels of €8.7 billion after five consecutive quarters of declines in response to the rising cost of debt and uncertainty around pricing.

However, the number of deals fell slightly, down 3% from Q1 levels at 226 transactions recorded. This saw the average living deal jump from €37 million to €47 million, following a number of large deals in Germany. This included Vonovia’s sale of its 30% stake in its Südewo portfolio to Apollo for €1 billion and a portfolio of 1,350 flats to CBRE Investment Management for €560 million.

Multifamily accounted for 75% of investment from April to June, with healthcare at 14% and student housing making up 11%. The UK and Germany continued to attract the majority of investment, accounting for over half of Q2 volumes, at 29% and 24% of the total respectively.

In the UK, a combination of large student housing and single-family rental deals bolstered volumes. This included Citra Living’s €191m purchase of a regional portfolio from housebuilder Barratt Homes, with JLL advising the buyer.  Other key markets for Q2 dealmaking included Sweden and the Netherlands.

Activity remains muted following high inflation and regular rate rises from the European Central Bank. The investment of €19.4 billion in living assets from January to June is just under half the €40billion invested in the same period in 2022. While living declines have been lower than offices and industrials and logistics, year-on-year investment in in the first half is still 52% lower than the same period last year and 47% below the five-year average for H1.

Gemma Kendall, head of multifamily for EMEA at JLL, said: ““European living sector yields are beginning to stabilise, transactions are picking up, but we still have a way to go to return to historical investment trends. This period of lower dealmaking activity offers opportunity for equity investors able to take advantage of the short-term market challenges to acquire assets for the long-term.”

Emma Rosser, research director for EMEA at JLL, added: “The various living markets across Europe have continued to attract significant capital in the second quarter. Buyers are pursuing diversity in various living sub-sectors. This interest, underpinned by a fundamental undersupply, has driven the sector to account for the lion’s share of real estate investment this quarter, a long-term trend that we expect to continue.”

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