Major US investors are making an entrance into the German market for terraced and detached single-family houses. Following Goldman Sachs, which acquired a package of 491 terraced homes last year in collaboration with a Canadian pension fund, US asset manager PGIM is now showing interest in the sector, according to reporting by the “Handelsblatt”.
PGIM, which is part of the US insurer Prudential Financial, has indicated that it is currently analyzing the German new-build terraced housing market. According to Sebastiano Ferrante, the company’s Europe Chief, PGIM plans to focus not on resale value, but on rental yield.
The firm sees significant opportunities in the urban peripheries of large German cities. They propose building these seasonal terraced houses in a modular fashion, costing between €1,900 and €2,000 per square meter. Once constructed, these homes could then be rented out for €17 to €18 per square meter. Ferrante added that such arrangements could still represent an affordable option for families, with total monthly rents ranging from approximately €1,700 to €1,800.
This move marks a significant shift in the German real estate landscape, as institutional investors have historically avoided activity within the single-family home sector. This shift is occurring amid a weaker transaction market, where developers are currently relying on guarantees from large investors to secure pre-sales for their financing-in exchange for more favorable entry pricing.