Archive for March, 2016

‘Generation Rent’ drives appetite for UK residential investment

Written by Paola Barozza

Investment opportunities in UK residential property are expanding as fewer people can afford to buy their own homes and the number of renters increases.

Standard & Poor’s (S&P), a credit ratings agency, says that growing demand for rented housing together with new government incentive schemes are main drivers behind higher institutional investor appetite for the sector, which potentially needs about £30 billion (€38 billion) of investment.

S&P – which has noted that homeownership in the UK declined from 70% in 2005 to about 64% today – says that investment managers such as Venn, M3 Capital Partners, Prudential Financial, M&G, and Legal & General have allocated large sums to the build-to-let market over the past two years.

A recent Internos Global Investors survey of 62 investment organisations found the British private rented sector is “by far the top investing preference” among various real estate options, S&P said.

In its ‘Generation Rent’ report, S&P said investors may use project finance as a vehicle to enter the sector on a long-term basis, that construction risk is no longer a major deterrent, and investors are actively looking to be involved from the procurement stage.

S&P economists forecast nominal house prices will rise 5% year on year in 2016 and 3% in 2017. This follows sharp rises of 10% in 2014 and 7% in 2015 on the back of the UK economic recovery.

Residential housing is not historically a major investment area for UK pension funds

Investment Plan for Europe: new guidelines on combining European Structural and Investment Funds with the EFSI

Written by Paola Barozza

The Commission, in partnership with the European Investment Bank (EIB), explains how to best combine the funds.

The Juncker Commission’s top priority is to get Europe growing again and to increase the number of jobs without creating new debt. The European Fund for Strategic Investments (EFSI) – the heart of the Investment Plan for Europe – and European Structural and Investment Funds (ESI Funds) both play a crucial role in creating jobs and growth.

A brochure published today is designed to help local authorities and project promoters make full use of the opportunities of combining the EFSI and ESI Funds. These two instruments have been designed in a different but complementary way in terms of rationale, design, and legislative framework. They reinforce each other.

European Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, said: “The EFSI was created to be as flexible as possible and there are huge opportunities for project promoters to apply for EFSI financing as well as ESI Funds. The guidelines we are publishing today give practical advice to businesses looking for project financing on how to make the best use of both instruments.”

Commissioner for Regional Policy, Corina Creţu, said: “Achieving the objectives of the Investment Plan for Europe is a joint effort and all sources and actors need to be mobilised. This is why I will make sure that we fully exploit the growth potential of the ESI Funds, with strategic, performance-oriented investments, boosted by an increased use of financial instruments.”

Vice-President of the European Investment Bank, Ambroise Fayolle, said: “Bringing together European structural and investment funds with the EFSI will allow the EIB to support sustainable growth throughout European countries and regions. By combining EU grants and EIB financing the bank can reach out to new beneficiaries, in particular smaller projects regrouped in investment platforms.”

The brochure provides an overview of the possible combinations of EFSI and ESI Funds, either at project level or through a financial instrument such as an investment platform. It will be enriched with the experience drawn from concrete cases and feedback received from stakeholders.