Cushman & Wakefield
2024
Tom McCabe, Stephen Screene, Alexandra Paulin, and others
The "EMEA Living Investor Survey 2024," published by Cushman & Wakefield, offers a deep dive into the evolving landscape of the living sector across Europe, the Middle East, and Africa. Conducted in February 2024, this comprehensive report captures the sentiments of investors amid a backdrop of economic uncertainty, while highlighting the robust growth potential in the living sector, which now represents about 20% of the European real estate market. The survey reveals strong investor interest, particularly in the Private Rented Sector (PRS) and student accommodation, with the UK and Germany poised for significant recovery in living investment volumes. Investors are increasingly favoring investment strategies such as stabilised stock, joint ventures, and forward funding, which are viewed as effective ways to mitigate risk and enhance scalability. Sustainability emerges as a critical focus, with nearly 80% of respondents prioritizing sustainable investments. Many investors are willing to pay a premium for assets that demonstrate strong sustainability credentials, indicating a shift in investment priorities. Despite a predicted slowdown in the European economy, investors remain optimistic, with expectations for prime living capital values to bottom out by mid-2024. Looking ahead, almost 80% of investors express intentions to increase their allocations in the living sector over the next five years, projecting annual inflows of €70-85 billion. This optimism, combined with an interest in social and affordable housing, suggests that the living sector will continue to attract significant investment, driving innovation and growth in the market.
The "EMEA Living Investor Survey 2024" is a comprehensive report published by Cushman & Wakefield, a leading global commercial real estate services firm. The report provides insights into the trends and expectations of investors in the European, Middle Eastern, and African (EMEA) living sector. It was authored by a team of experts including Tom McCabe, Stephen Screene, Alexandra Paulin, Joep van de Vorstenbosch, Millie Harper, Mark Clegg, Geoff McCabe, Patrick Hogan, Andrew Smith, Jan Bastian Knod, and Luca D’Anzieri. The survey was conducted in February 2024.
Key Findings
- Growth of the Living Segment: The living segment has rapidly expanded to constitute approximately 20% of the European real estate market. This growth is reflected in both rising transaction volumes and increased allocations in real estate indexes.
- Investor Preferences: There is strong investor interest in the Private Rented Sector (PRS) and student accommodation. The UK and German markets are expected to benefit most from a recovery in living investment volumes.
- Investment Strategies: Stabilised stock, joint ventures, and forward funding are the preferred deal structures among investors. These strategies are favored due to their potential for risk mitigation and scalability.
- Economic Outlook: Despite a slightly weaker European economy anticipated in 2024, only modest reductions in interest rates are expected. Investors foresee prime living capital values bottoming out by Q2 2024.
- Sustainability: Sustainability is increasingly important for investors in the living sector. Nearly 80% of surveyed investors consider sustainability a key objective for their portfolios, with many willing to pay a premium for assets with strong sustainability credentials.
- Future Allocations: A significant majority of investors (almost 80%) plan to increase their investments in the living sector over the next five years. This could result in annual inflows of €70-85 billion into the sector across the EMEA region.
Context
The survey reflects a cautious optimism among investors as they navigate economic uncertainties while recognizing the growth potential within the living sector. The findings suggest that while traditional segments like PRS and student accommodation remain popular, there is growing interest in social/affordable housing and co-living spaces. The report indicates that improved pricing alignment and a favorable interest rate outlook may drive recovery in investment volumes starting in 2024.
Overall, the "EMEA Living Investor Survey 2024" provides valuable insights into investor sentiment and strategic priorities within the living sector, highlighting both challenges and opportunities as the market evolves.