Rental housing gains appeal amid supply crunch: asset managers

The rental housing markets in the US, Europe and Australia present attractive investment opportunities as persistent supply shortages and rising urbanization continue to undermine housing affordability, said global asset managers at the alternative investment conference ASK 2025 last week.

Their residential property markets have come under pressure in recent years, squeezed by tighter liquidity amid elevated interest rates.

The gap between mortgage payments and rents has been widening since late 2022, fueled by a slowdown in new construction starts.

“Urbanization in Europe is driving demand leading to tight housing markets in agglomeration areas,” Felix Speetzen, director and fund manager at the Germany-based Patrizia, said in a presentation at ASK 2025. “Cities are now the new countries.”

US MULTIFAMILY

Harbor Group International sees compelling private credit investment opportunities in the US multifamily sector.

Some 75% of US households cannot afford a median-priced new home in 2025, Jordan Slone, chairman and CEO of Harbor Group International, said in a presentation at the biannual investment forum hosted by The Korea Economic Daily.

He added that the US faces a 3.8-million-home shortage.

According to the investment firm, the monthly cost of home ownership in the US stood at $3,123 on average in the first quarter of this year, about 40% higher than the monthly rent of $2,184 in the same period.

From 2010 to early 2020, the cost of home ownership in the US trailed rental prices.

Dean Allara, vice chairman of Bridge Investment Group, expects a sharp rise in rents next year as the pace of multifamily construction is slowing after peaking in 2022.

The US housing shortfall is hovering at record-high levels with a diversifying renter base. Bridge Investment, based in Utah, is bullish on Class B multifamily, single-family rentals, workforce housing and senior living facilities.

AUSTRALIAN HOUSING MARKET

Macquarie Asset Management sees a strong upside momentum in Australia’s rental housing market over a five-to-10-year perspective. It said the housing vacancy rate in Australia remains below 1%.

To lure foreign investors, Australia has cut the withholding tax on non-resident sellers or renters of properties to 15% of the sale price or lease premium from 30%, effective from the start of this year.

Write to Yeonhee Kim at yhkim@hankyung.com
 

Yeonhee Kim edited this article.