New research by global real estate advisor, CBRE, has found that multifamily housing is the second largest sector for real estate investment in Europe and could become the dominant sector.
International investors are putting record volumes of capital into multifamily housing in Europe. With €52bn of cross-border capital committed to European multifamily housing between 2015-2018, the new CBRE report Capital Flows into European Multifamily Housing, looks at the origins of this capital and the types of investor moving into this quickly maturing investment class.
While historically, investment in multifamily has been dominated by domestic investors, cross-border investment volumes have more than doubled over the last four years, with €17.8bn invested in 2018.In the Irish market, more than 40% of investment in real estate in the first half of 2019 comprised residential investment with Dublin having made it into the Top 10 destinations for cross border multifamily investments.
The top destinations for cross-border multifamily investments were Berlin, Copenhagen and London, which are cities with established multifamily markets, or rapidly increasing numbers of purpose-built rental developments.
However, the top ten cities attracted only 28% of the total cross-border investment, indicating investors can have broad geographical exposure, with smaller cities offering investment opportunities.
Commenting on the research, Executive Director & Head of Research at CBRE Ireland, Marie Hunt said, "Multifamily housing in Europe is an evolving market with strong potential for further growth. There was a record €57bn invested into multifamily housing in Europe in 2018, but this is dwarfed in comparison to the US, which has the most mature multifamily market in the world. Investment into US multifamily grew from $22bn in 2001, to $175bn in 2018, making it the dominant real estate investment sector there."
She added, "Given the strong investor appetite, and the continued supply-demand imbalance, Europe could follow a similar trajectory - a trend that is already very much in evidence in the Irish market considering the year-on-year growth in investment being witnessed."