Philipp Langbehn of KGAL explains why professional investors should invest in residential real estate and related products. However, investors shouldn't wait too long, as many bargain hunters have begun to take advantage of the low prices.
Among institutional investors, the residential sector is considered a safe haven in the real estate segment due to the steadily increasing demand for housing and stable income. Its share of investment volume has therefore grown rapidly from approximately twelve percent in 2014 to 22 percent in 2024.
"Even in the difficult market environment following the interest rate turnaround, residential investments have demonstrated greater resilience compared to other real estate segments. While transactions have temporarily declined noticeably and gross initial yields have increased by an average of around 125 basis points, according to market reports from the real estate firm JLL, there are already initial signs of a return to the growth path," writes Philipp Langbehn, Real Estate Portfolio Manager at KGAL, in an exclusive article published by "Institutional Money."
According to Langbehn, investors from the US, UK, and Asia are becoming increasingly active, as they view higher yields and moderately declining interest rates as an attractive entry point. "European institutional investors are – unfortunately – still exercising caution. Let's take a look at the fundamentals," explains Langbehn.