The global pandemic has shown that not all ‘beds’ are the same, but the long-term case for investing in living asset classes remains compelling.
The latest European investment figures from CBRE show that multifamily is closing the gap on office investment, in a key sign for an asset class which was once considered the preserve of niche investors.
CBRE’s H₁ 2020 investment volumes for multifamily reached €33 bn, up 37% on the same period last year, while offices have seen transaction volumes of €41 bn since the start of the year, representing a decrease of 16% on H₁ 2019.
Circumstantial observations about offices aside – with the current and future role of the workplace under scrutiny due to the conditions imposed by the global pandemic – the latest figures represent a clear fillip for the residential sector. Furthermore, investments in ‘beds’ or ‘living’ asset classes – ranging from the private rental sector to affordable housing student accommodation and senior care – have seen some of the steepest rises in fund allocations in recent years, comparable only to burgeoning interest in the logistics sector. The great hegemony of offices and retail in commercial real estate investment seems to be coming to an end.
MULTIFAMILY MAINSTREAM
While many major funds feel happy embracing the full range of ‘beds’, a much bigger consensus remains for the multifamily investment case. Jason Oram, partner at Europa Capital, says: ‘For some time pre-pandemic, Europa Capital had already allocated a significant proportion – around 35% – of its investment activity towards the residential sector. The recent uncertainty does not give us cause to change this target, albeit our acquisition activity will progress with increased caution over the near to medium term.’ For Oram, details might alter – but the value looks to be there long term. ‘We are increasingly focused on the appropriate level of occupier amenity in a post-pandemic market. It may be that balconies offer a greater appeal than gymnasiums in future,’ he notes.
