Unlocking affordable PRS to address the twin challenges of housing need and decarbonisation

‘Unlocking affordable PRS to address the twin challenges of housing need and decarbonisation’ is the latest INREV paper and the second piece in INREV’s research series on the European intermediary private rented sector (PRS). The paper outlines the scale of non-listed investment across residential PRS segments, combining analysis of INREV’s proprietary index and survey data. It also sets out its performance profile and risk characteristics, exploring the impact of decarbonisation strategies on returns from a short and longer-term perspective.

Key highlights:

• Residential allocations account for 23% of the total GAV of the INREV Annual Fund Index. Over the last decade, it has moved from being the smallest to the largest major sector across single-sector funds while office and retail have contracted.
• Some form of direct and indirect subsidy is viewed to be at least important to the viability of intermediary PRS by 94% to 96% of INREV Residential Survey respondents, while over 25% to 29% consider such intervention as being essential. This should be of interest to policymakers seeking to harness institutional capital to assist in expanding housing supply, particularly intermediary PRS.
• Most investors and fund managers consider fiduciary duty and decarbonisation to be fully aligned in principle, however, there are impediments to implementation, notably the valuation conundrum and a need for stronger regulation imperative or some form of punitive measure such as carbon pricing.
• Costs associated with decarbonisation should be considered from a return on investment and risk management perspective rather than as a cost.

Download the full paper below.