UK is top hotspot for European and overseas residential investment Post-Brexit
- Nearly three-quarters of investors (75%) plan to invest in European residential assets over next 12 months
- Of these, nearly one third (29%) expect to invest more next year compared to 2020, on average increasing assets by nearly 30%
- UK is the number one location for investment over the next twelve months, followed by France and Germany
- Only 11% of investors feel negative about the current outlook for the European Real Estate market
Investment in the UK Real Estate market is open for business post-Brexit, according to the European Real Estate global survey by DLA Piper, the international law firm. The survey of 500 investors, developers, and asset managers with more than USD3bn AUM from across Europe, China and the US, ranks the UK highest for future residential real estate investment.
Overall the top five countries for investment in residential assets over the next 12 months is the UK (33%), France (28%), Germany (25%), Spain (24%) and Italy (18%).
Top countries in which global companies, asset managers and developers wish to invest and manage residential assets over next 12 months
| Rank | Investors headquartered in the EU5* | Investors headquartered in the US | Investors headquartered in China | Global total |
|---|---|---|---|---|
| 1st | Spain (33%) | UK (39%) | UK (52%) | UK (33%) |
| 2nd | France (31%) | Germany (27%) | Germany (38%) | France (28%) |
| 3rd | UK (28%) | Hungary (17%) | Finland (30%) | Germany (25%) |
| 4th | Germany (22%) | France (15%) | France (28%) | Spain (24%) |
| 5th | Italy (20%) | Finland (12%) | Denmark (26%) | Italy (18%) |
Signalling that the market is attractive for future investment, nearly three-quarters (74%) of respondents plan to invest in European residential assets over the next twelve months. Of these, nearly one third (29%) expect to invest more in 2021 compared to 2020, on average increasing assets by nearly 30%. When investing, the majority (88%) will also choose to enter new countries in partnership with a local developer or manager.
Traditional residential assets are the preferred haven choice for most investors, with nearly three-quarters (71%) managing build or own-to-lease properties, while half (51%) maintain student living premises and two-fifths (44%) senior and retirement living spaces.
Despite the lingering COVID-19 pandemic and uncertainty over the shape of recovery, more than half of respondents (55%) feel positive for the outlook of the European Real Estate market - with only (11%) feeling negative. Those headquartered in China and the EU5 are the most positive, 66% and 57% respectively.
Current outlook on the European Real Estate market
| Sentement | Investors | Investors headquartered | Investors headquartered | Global total |
|---|---|---|---|---|
| Positive | 57% | 37% | 66% | 55% |
| Neutral | 32% | 48% | 24% | 34% |
| Negative | 11% | 15% | 10% | 11% |
The top reasons respondents cited causes to be optimistic were that there is high demand due to a shortfall in supply (43%), real estate income yields are higher than those for fixed income (43%), and asset prices remain attractive (40%). For those respondents that remain negative, concerns over the pandemic and more lockdowns (64%), the recession impacting demand (51%) and the fact that the real estate market lacks daily liquidity in comparison to equity and bond markets (46%) were cited as the three main reasons.
Commenting on the findings, Olaf Schmidt, Real Estate partner and Managing Director of Practice Groups at DLA Piper, said:
“Investment in European residential real estate assets has been traditionally considered a market for local investors and it was largely dominated by local asset managers. High barriers to entry due to the existence of different national market practices and legal systems made it difficult to enter this market. However, over the past few years this has changed. Residential developers went international, asset managers have created teams specialised in the residential market segment, institutional capital opened up, and asset managers can now invest in the various forms of residential assets across Europe.”
“Today’s findings show that despite the ongoing challenges of the COVID-19 pandemic, the European Real Estate market remains attractive because of its strong fundamentals, low interest rates, and high potential yield returns compared to equity markets. The UK remains an attractive market for investment also post-Brexit which should provide confirmation and reassurance that the UK is a vital hub for activity and growth.”
The full report: Residential Investments in Europe will be available in December.
A Censuswide survey commissioned on behalf of DLA Piper. Survey carried out between 13-16th October 2020. Mixture of 500 investors, developers and asset managers with a minimum USD3bn AUM across Europe, China and the US. Survey weighting is EU5 (75%), US (25%) and China (25%).
*EU5: UK, Germany, France, Spain, and Italy.
