The issue of housing affordability, and the lack of it, has intensified in major European cities of late.
“We can truly speak about an affordability crisis, and young people, key workers, really have no place to go and to live anymore,” said Hilke Nijmeijer, portfolio manager Europe residential strategy at CBRE Investment Management.
She pointed out that it is, however, a complicated problem that cannot be solved that easily. “I think that, as an investor, for us it is really important to lead institutional capital into that market.”
But while capital is needed, the entire value chain needs to address the issue. “It starts with the municipality, with land prices, with rent setting, and developers building innovatively and building enough,” she told Real Asset Insight. “If that entire value chain is cooperating, I think we should manage to deliver more supply and then, in the end, houses will become more affordable.” She said this will contribute to more affordable housing and more inclusive cities.
Nijmeijer added that there is a huge responsibility for governments and public authorities to address this theme, but for those investing in the market to do so in a socially responsible way.
Residential is an interesting asset class to invest in with an attractive risk-return profile. “And if you go more into affordable living, the risk profile even is lower than if you go into a regular residential market. There is a nice long-term stable return which you get, and at the same time, you can make a positive impact by adding more affordable housing. It’s really that combination which should convince investors to invest their capital in this market.”
Nijmeijer said there have been attempts to address the problem. One example is in Madrid where the municipality offers concessions that provide land free of cost, but after 50 to 80 years the building ownership reverts to the municipality. “So that is a bit difficult for market participants,” she said. Governments and municipalities are getting into action and to try to find solutions, “but the best solution, I have not seen so far.”
“So it’s also up to us to start thinking about that and sharing knowledge and, together with the public authorities, to find the best solutions to address this.”
