The ECB’s monetary policy is a quite controversial topic. The ongoing ultra-low interest rate period hasn’t led to significant inflation increases in the Eurozone, as it was well below the ECB’s 2% target in the previous years. However, in the Eurozone and other major European housing markets, house prices grew faster than disposable incomes. In Germany, the Netherlands and Sweden, house price rises since 2012 have more than doubled the pace of real disposable income growth.
Whilst increasing regulation might create a substantial barrier for institutional investors to invest in some markets, demand drivers for residential and accommodation in general are expected to remain favorable and should attract further investments in future. As an investor a thorough understanding of structural and regulatory changes in those target markets is crucial to have a sustainable and profitable investment. Investor awareness with regards to regulation and reputation is needed to avoid possible minefields. The accommodation sector is now much more established than a decade ago accounting for a quarter of total commercial investments in Europe. Appetite for this sector is expected to continue due to the sector’s stable income profile and diversification benefits.