German property investor Patrizia has signed a 5,500 home acquisition deal, the largest transaction seen to date in the Dutch housing market that gives a hint of the way the UK rental market could go.
The EUR578 million deal will see Patrizia taking on a mixed rental housing portfolio previously owned by Dutch housing association Vestia. The investor will place the homes within one of its investment funds, which will use money from one of the German pension funds as its major source.
Could an investor of the scale and confidence of Patrizia enter the UK rental market as an investor? Having disclosed why it likes the Dutch market, there are some common themes, so such a possibility is not far fetched.
The reason for Patrizia investing in the Dutch market is down to its belief in long term value protection and growth. This is due to projected population growth as far ahead as 2025, falling average household sizes and therefore continuing significant demand for housing.
“For some time now, our institutional investors have had such confidence in us that they are investing with us outside their familiar national borders,” commented Klaus Schmitt, COO of Patrizia. The company says it is on track to become Europe’s leading real estate investment company.
The portfolio that Patrizia has bought into has 340,000 sq metres of residential floorspace in total, with just 3% vacant. Around 70% of the homes acquired are currently subject to rent control.
Patrizia already operates three investment funds specifically focused on the residential market. Of these, two are investing in German properties, with a third looking wider across Europe for its investment opportunities. Its major German investment deals included the EUR1.4 billion purchase of a 21,000 home portfolio in 2012, and a co-investment in a 31,900 unit portfolio in 2013.
Patrizia is already investing modestly in the UK, through minority stakes in commercial property deals. It holds 10% of a company holding properties in Birmingham, Bracknell and Camberley, and also took a 5% interest in the acquisition of the Winnersh Triangle (or IQ Winnersh) commercial estate west of London.