Investor appetite for a stake in European residential rental properties is hotting up, with the German market already looking too hot for some. As a result, interest is increasing in the Dutch market, where it appears the rental property market may now be turning positive once more. With increasing competition for residential rental portfolios, investors will be keeping a close eye on the UK market which will become increasingly attractive by comparison.
In Holland, Dutch company Domus is launching on the Netherlands stock market, in a share sale that will raise EUR250 million for the company and for its current backers. Domus owns around 44,000 rental homes in the Ostrava region of the Czech Republic.
Domus is owned by Dutch private equity firm BXR, which will retain a stake in the business. BXR is itself partly owned by a Czech investor, and is linked to Czech property company RPG Byty, which will be folded into Domus as part of the listing.
Meanwhile German housing group Gagfah has arranged a EUR176 million funding deal with HSH Nordbank, covering a portfolio including more than 4,400 residential properties in the Heidenheim area. Gagfah is one of Germany’s leading listed residential companies, with around 144,000 of its own rental apartments, and a further 35,000 managed for other owners, spread across the country.
German finance costs are low, allowing local investors access to funds with low fixed costs over the long term, one reason why shares in German REITs make an attractive holding for investors. Gagfah’s refinanced loan has a weighted average length of six years, so reducing it financing costs, compared to the existing finance that the new loan will replace.
And the strength of the German market has prompted one investor to look instead to Holland. BNP Paribas REIM Germany recently opted to purchase a portfolio of 265 apartments in Randstad for EUR40 million, where it perceives the residential rental market taking a turn for the better.
The company’s Reinhard Mattern told Investment Europe: “In Germany, our investors’ room for manoeuvre in acquiring properties with a satisfactory return is becoming ever more restricted due to continued high demand. At the same time, however, real estate investments are one of few investment opportunities that are also attractive at a time of low interest rates. In this environment, we have to identify and establish long-term alternatives.”