The “European Living Sectors Investor Survey 2024/25” by Knight Frank highlights investment trends and challenges in Europe’s residential sectors. The survey notes a gradual recovery in investment volumes following interest rate stabilization, with €36 billion spent across living sectors over the past year, a slight increase year-over-year.
Key findings include a strong investor appetite for multifamily and purpose-built student accommodations, with emerging interest in single-family rental housing. ESG considerations are increasingly prioritized, driving investments in sustainable developments. Challenges include regulatory pressures, affordability issues, and a persistent supply-demand imbalance, particularly in high-demand cities.
In Sweden, demand is strong for value-add assets in prime locations like Stockholm, while regional cities offer opportunities for rental growth. Finland has seen an uptick in prime asset yields, though funding structures are shifting due to economic conditions. Both countries face challenges in financing and rising construction costs, but foreign investment interest is growing in Sweden, with domestic players currently dominating.
Key insights
Growth in Single-Family Housing: Over half of investors expect to invest in single-family housing by 2029, a significant increase from the current 31%.
Increased Debt Demand: 54% of investors anticipate needing more debt in the next 12 months, up sharply from 20% in 2023.
Regulatory Challenges: 62% of investors see potential new regulations as a major short-term challenge, with concerns about affordability due to rising rents across Europe.
Capital Allocation Increase: 41% of investors plan to raise their investments in the living sector by 40-100% over the next five years.
Investment Target Locations: Top cities for investment include London, Madrid, and Berlin, with other notable locations like Dublin, Milan, Amsterdam, and Barcelona.
Projected Capital Deployment: Over the next five years, investors aim to deploy €64 billion into the living sectors across Europe.
