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Investor confidence in the Living sector remains strong during COVID-19

JLL’s latest EMEA Living Quarterly Bulletin reveals that the Living sectors, including multifamily, student housing, coliving, and healthcare have maintained their defensive position as stable operating cash flows continued during the pandemic.


Demand for multifamily, one of the most resilient Living sectors, remains at an all-time high. Across the sector, early indications of rent collections levels are positive, with many investors reporting over 95% of income, spread across local markets. Record Q1 multifamily investment volumes in EMEA of €16.6 billion, marking a 64% increase YoY, are unlikely to be matched over the next two quarters, but liquidity is expected to remain high in the coming months.

The student housing and healthcare sectors have come under high scrutiny given the ongoing effects of the pandemic. The first quarter of 2020 represented a record start to the year for student housing, with volumes reaching €6.2 billion, surpassing previous totals of €2.1 billion in 2018 and €1.2 billion in 2019. This total was buoyed by activity in the UK, which accounted for over 90% of total volumes in Europe, due in part to Blackstone’s purchase of British student accommodation group iQ for €5.4 billion – the largest private property transaction in the UK. The impact on student housing investors, operators, and developers has been significant and student demand for the new academic year will vary across the region due to the travel and physical distancing restrictions. Encouragingly, institutional investor demand for scaled, student housing platforms remains resilient.

Q1 healthcare investment volumes in the region were strong, with a series of significant transactions, but activity in Q2 and Q3 will likely remain subdued, not least because of the difficulty for investors and advisors to gain access to sites for due diligence. However, dry powder allocated to the sector remains high and the strong underlying interest in the sector means deals should pick up again towards the end of 2020, assuming access restrictions are relaxed.

COVID-19 has put the spotlight on shared living arrangements, where higher density living and increased collaboration spaces could have potentially heightened the risks of transmission. Despite some operational challenges, most coliving companies have responded well to the crisis, leveraging the benefits of their service-driven model. Looking ahead, this pandemic will sharpen the focus of quality standards of coliving assets as well as the infrastructure and capabilities of operators across the sectors. With fundraising and institutional appetite for this asset class remaining strong, capital deployment in the sector is set to grow in late 2020 and early 2021.

“The short-term impacts of the pandemic on economic growth and business activity is undeniable. The future performance of the different Living sectors will vary significantly as the real estate industry adjusts to the new reality,” said Jeremy Eddy, Head of EMEA Living, Hotels & Hospitality Capital Markets, JLL.

“Investors looking to diversify and seek stable cash flow in the current environment will likely be attracted by the defensive characteristics of the service-based Living strategies. While general investment activity across the region may be subdued in Q2 and Q3 as governments, businesses and communities face up to the impact of the pandemic, we expect the deployment of capital across the Living spectrum to continue,” Eddy added.

“This pandemic will undoubtedly change the way we live and work for the foreseeable future, and new trends will emerge that will become part of our 'next normal',” said Adam Challis, Head of Capital Markets Research & Strategy, EMEA, JLL.

“We believe that investors will be looking for opportunities to capitalise on the changing demographics in the region, which will continue to be the main drivers and challenges for the Living sector,” Challis concluded.