Investors in Europe’s real estate poured a record €359 billion into the market in 2021, forsaking office buildings and storefronts for warehouses and homes.
Of those funds, €102.6 billion was sunk into multi-family housing, 42 percent more than in 2020. 
Multi-family housing is now close to office property as Europe’s biggest real estate asset category.
The continent’s investors put €111 billion into office buildings last year, a 20-percent decline from 2019, as money managers ponder the future impact of the remote work revolution.
Warehouses drew €62 billion in new investment last year, a 48-percent jump from 2020, as the COVID era’s boon in online shopping endures.
Investment in physical retail space fell 11 percent last year from 2020, settling at €35.2 billion.
TREND FORECAST: Europe’s shift in real estate investment strategy mirrors that happening around the world as the post-COVID economy takes shape and long-term investment strategies adjust to new realities.
E-commerce has become central to retailing as brick-and-mortar storefronts go dark, a trend we have documented in articles such as “Brick-and-Mortar Retail on the Ropes” (6 Feb 2020), “Retail Bankruptcies Hitting Record Highs” (6 Oct 2020), and “Black Friday Got Darker” (7 Dec 2021).
Storefront retailers will be hit even harder as retail chains open up shop in the metaverse (see related story in this issue), which is one of our “Top 2022 Trends.”
As e-commerce grows, warehouses—not storefronts—will be sought-after investments, as is already the case in Europe and even in India, as we documented in “Blackstone Gobbling Up India’s Storage Space” (27 Apr 2021).
The long-term trend in multi-family housing is driven by the soaring price of single-family homes and now the prospect of higher mortgage interest rates. Younger families are unable to scrape together a down payment or afford pricey mortgage and upkeep costs. 
Their alternative: apartments, demand for which has pushed rents to record highs—which means record profits for landlords, as we noted in “Apartment Boom Targets Affluent Tenants” (21 Jan 2020) “Apartment Rents Climbing” (20 Jul 2021), and “Rents Soar as Investors Buy Properties and Raise Rates” (14 Sep 2021).
Asset managers such as Blackrock and Tricon, not individuals or mom-and-pop property companies, are coming to own more and more multifamily housing properties, a trend we detailed in “The Bigs Keep Gobbling Up” (18 May 2021) and similar stories. 
This trend will keep rents high, squeezing more money from tenants and leaving many of them unable to afford down payments on even modest single-family houses.
The shift in real estate investing strategies is creating an entire generation of renters, denied the satisfaction of owning their own home and the opportunity to build wealth as equity grows in the homes they own.

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