Multifamily now firmly established as Europe’s second-biggest real estate sector

According to Savills, European multifamily is now firmly established as Europe’s second-biggest real estate sector. At €24.1 billion, it captured 23 percent of the investment activity in the first half of 2021 across the 12 countries that the international real estate advisor monitors. This compares to a five-year average of 16 percent. Office investment was the highest, accounting for 28 percent of the total, at €29.3 billion.

During the past few quarters, investors have shown confidence in the defensive characteristics of multifamily, increasing their allocations in the residential sectors and launching new funds. Multifamily accounted for about one-third or more of the activity in Sweden (31 percent), Spain (32 percent), Germany (32 percent), Denmark (34 percent), and Finland (42 percent).

Investment into the multifamily sector in Poland reached close to €550 million in the first half of 2021. This makes the PRS (Build-to-Rent) the third biggest commercial real estate sector, behind office and industrial but ahead of retail. However, as the Polish multifamily sector is in its infancy with very few completed developments, projects at an early construction or even pre-construction stage account for a vast majority of the investment volume.

“Compared to more mature European markets, the Polish rental market continues to offer competitive yields that attract new investors. I think that private investors will find it increasingly difficult to achieve similar rates of return due to rapidly rising home prices and the pandemic correction of rental rates. Institutional investors will have it a little easier by building scale and acquiring buildings originally designed as multifamily projects. With record mortgage borrowing and an expected hike in interest rates, residential developers are likely to reconsider wholesale transactions going forward although there is no sign of any slowdown and their sales teams are experiencing a period of prosperity,” Kamil Kowa, Board Member, Savills Poland, said.

(WBJ)