Aberdeen Standard Investments has launched what it claims to be the first residential property fund to invest on a pan-European basis.
The Luxembourg-domiciled open-ended fund aims to capitalise on high demand and the low supply of rented residential property in cities across Europe.
Supported by the Dutch fund manager Pensioenfonds Metaal en Techniek and its fiduciary manager MN, initial investments in excess of €350 million have so far been received from eight investors in the Netherlands, Switzerland, and Luxembourg.
With further fund-raising planned, the fund is intended to grow to more than €1 billion over the next five years.
The fund will buy existing private rental housing blocks and forward-fund the development of new stock to create a portfolio of high quality, sustainable middle-income residential property.
While the private rented sector will be the fund’s priority, 25% cent of the portfolio can be invested in other types of accommodation such as student housing, retirement and nursing homes.
While the last couple of years have seen a spate of funds moving into UK property, so far the trend has been more muted in the rest of Europe.
The fund will be managed by Marc Pamin based in Germany, supported by assistant fund managers Ed Crockett in the UK and Ole Tange in Denmark.
Up to half of the total capital will be deployed in Germany, with the remainder invested across cities in western Europe, including the UK.
The fund will target a return of five to seven per cent, with an income element of three to four per cent per year. Debt will not exceed 40% (loan to value) at a fund level, with a long-term target leverage of 25%.
Aberdeen Standard Investments’ global co-head of real estate Pertti Vanhanen said that secure long-term rental streams provided by the private rented residential sector are a good opportunity for investors.
He points to the fact that in Germany around 50% of the population rents privately and the sector is an established asset class that saw €16bn of investment in 2017.
“Rapid population growth in European cities means that the supply of good quality rented accommodation is in great demand and this is driving a surge in investor appetite,” he said.
“By advance-funding some developments we will help meet that demand while providing accommodation that’s of a decent standard, in locations where people want to live.”
The fund is currently registered for sale in Germany, the Netherlands, Switzerland, Luxembourg, the UK, Austria, France, Italy and Belgium with further countries likely to be added in coming months.
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