1. The rising potential of single-family rentals (SFR) in Europe

Within the rental investment market, single-family homes refer to independent residential properties. These typically include detached houses, townhouses, and terraced homes leased to individual households. This contrasts with “multi-family” properties, which usually consist of blocks of flats purpose-built for rental purposes.

According to The Business Research Company, single-family rental (SFR) investments have increased worldwide over the past few years. The global construction market value for single-family housing (individual houses) is expected to reach $981.26 billion in 2027.

The strong interest in single-family rental investments appears unlikely to be a short-term trend. Instead, it is driving the development of creative approaches to address specific rental needs. This momentum extends across borders, as demonstrated by the growth of single-family housing projects in Europe.

At the same time, real estate professionals investing in single-family rentals must address several operational challenges:

1. Building up: Sourcing, underwriting, acquiring, refinancing, and renovating properties at scale—often 300 to 500 units at a time. This requires highly streamlined and industrialised operations from the outset.

2. Property management: Managing an SFR portfolio spread across multiple locations presents significant operational challenges, particularly in countries such as France. Unlike traditional residential portfolios, economies of scale are limited, making highly efficient and streamlined property management essential.

   
   

   

2. Build-to-rent (BTR) challenges traditional investments in real estate assets

Build-to-rent (BTR) refers to the development of purpose-built rental properties that prioritise renter comfort, convenience, and community engagement. This model challenges traditional property investment strategies by offering not just housing, but holistic living experiences.

Build-to-rent properties are designed around the needs of modern renters and often include a wide range of amenities, professional management, and a strong focus on community-building. Institutional investors typically pursue BTR projects through joint ventures with operating partners such as developers and property managers, or via crowdfunding structures.

Build-to-rent presents an attractive opportunity for investors seeking passive income while making a positive impact on the housing market. According to the British Property Federation, the supply of BTR units in the UK has increased by over 400% since 2015. In December 2015, there were approximately 50,000 units completed, under construction, or planned. By Q2 2023, that number had grown to 253,000.

However, institutional investors focusing on BTR must be mindful of recent challenges, including:

• The introduction of new rent controls

• Changes to government policy

• Resource constraints at the local authority level

• Rising interest rates, increasing building costs, and higher construction material prices

3. Tackling socio-economic challenges with sales and leaseback

A sales-leaseback transaction (also known as “sales and leaseback” or “leaseback sales”) typically involves a property owner selling their property to an investor and then immediately leasing it back. In this structure, the seller becomes the tenant, and the buyer becomes the landlord.

Sales and leaseback arrangements have gained increased attention in recent years, particularly in countries such as Germany, where the median age reached 47.8 years in 2022 and continues to rise rapidly. Similar demographic trends exist in countries like Italy, where the median age stood at 46.5 in 2022.