Barriers to Institutional Investment in Rental Housing: A Systematic Review of Market Risks

Housing practitioners and policy experts are advocating for an expansion in rental housing supply in contemporary cities around the world. The objective is to convince institutional investors to include rental housing investment in their investment portfolio to contribute to boosting housing supply. Unfortunately, the rental sector is characterized by numerous uncertainties and challenges, making it unattractive to institutional investors. With the growing attention to institutional investors in various housing market contexts, an understanding of the market risks (also known as barriers), is useful to inform future research and policymaking. Using a systematic literature review methodology, this paper synthesizes the extant literature on the market risks inhibiting institutional investment in rental housing. Findings reveal the following barriers: low profitability, non-progressive rent control policies, unclear target group for rented projects, poor landlord-tenant relations, inadequate property management and unreliable property market information. Among all the barriers identified, low profitability and inadequate property management had great influence on their investment decision. Firstly, institutional investors perceive rental housing investment as less profitable and unattractive in terms of project performance. Secondly, the lack of supporting structures for the property management sector contributes to derailing rental yields. The review also finds that the target group for rental projects are often vague especially for projects under government assistance. The rental sectors in many countries are confronted with numerous problems, some of which greatly inhibit institutional investors from investing in the rental asset. This paper concludes that, although the idea of expanding rental housing supply seems laudable, ignoring these problems may be detrimental to housing markets in the long run. Rental markets in many countries are volatile, and thus not ready to receive institutional investors fully into the sector. An expanded rental sector could be advanced if policy makers take the appropriate steps to resolve the identified challenges. Adequate structural preparations must also be made for large scale rental housing supply.

Policy Diffusion in a Redistributive Policy: Affordable Housing and State Housing Trust Funds

Diffusion models explore the reasons policies transfer across governments. In this study, we focus on U.S. state level efforts in affordable housing. Drawing predominately from policy diffusion literature, our research examines the determinants of the creation of state Housing Trust Funds (HTFs). We utilize event history analysis with logit regressions and survival modeling to examine how problem severity, neighbor adoption, economic standing, elected leadership, housing investment, and demographics predict state HTF adoption. Results indicate that both problem severity and elected leadership predict the adoption of HTFs. This work improves our understanding of state policy diffusion and efforts in housing affordability.

The changing position of housing estate neighbourhoods in the Helsinki metropolitan area

This paper addresses the under-researched phenomena of investments in the private rental markets in disadvantaged suburbs in Finland. Despite the application of a social-mixing policy in the Helsinki Metropolitan Area and the Nordic welfare model, suburban housing estate neighbourhoods built in the 1960s and 1970s have experienced a socioeconomic decline since the 1990s. According to several recent large surveys, housing estate neighbourhoods represent the least popular housing environments among Finns. Nevertheless, as the Helsinki Metropolitan Area is currently facing rapid population growth, these neighbourhoods have now become the target for heavy infill development, and ambitious city-led regeneration plans. Simultaneously, housing investment has become an opportunity in Finland for both national and, increasingly, also international real-estate investment companies, as well as for private households. We explore the resurge to invest in housing estate neighbourhoods through two case studies in the Helsinki Metropolitan Area. Using statistics and interviews with policymakers and institutional real-estate investors, as well as a review of policy documents as our data, we show the variegated ways in which the marketization and financialization of housing and urban renewal policies change the social geography of housing estates in the Helsinki Metropolitan Area.

Mind the rent gap: Blackstone, housing investment and the reordering of urban rent surfaces

Recent years have seen a burst of new writing on the opening and closing of urban rent gaps. Such studies generally consider individual cases. Rarely does the opportunity arise to readily compare and contrast rent gaps across multiple cities and territories, least of all within the context of a single developer or investor portfolio. Such an opportunity has arisen in the past decade, however, as the US investment firm Blackstone has pursued a multi-territory housing-investment strategy specifically of identifying and closing rent gaps, which it styles ‘buy it, fix it, sell it’. This article examines that strategy and the varying nature of its implementation in Danish, German, Swedish and US cities. It argues that the rent gap is a paradoxical phenomenon: vast gaps, promising vast profits, frequently open up and frequently remain open for long periods before being closed – if they are closed at all. A primary reason is that successful and profitable closure requires not just favourable local political-economic conditions but a singularly well-funded, determined and aggressive investor – an investor, that is, such as Blackstone.

High-speed Urbanization and Housing Bubbles

With China's high-speed urbanization, the housing demands and housing prices have increased rapidly in major cities. By combining the classical bubble theory with investors’ short-term decisions, we propose a method to simulate bubbles' rising and bursting process in a multi-sector economy. We find that when urbanization goes too fast, the housing price growth rate will exceed the industrial interest rate, causing enterprises to buy houses. Enterprises’ housing investment further increases the expected returns of housing investment, attracting more investment and leads to housing bubbles. The faster the speed of urbanization, the higher the housing price grows, the longer the bubble cycle, and the greater the impact on the economy when bubbles burst. Continued urbanization cannot prevent bubbles from bursting. To ensure economic stability, the pace of urbanization needs to be limited.

Aspects of digitalization of the management system in the course of implementation of housing investment and housing projects

This article aims to show how the implementation of the Unified Information Platform (UIP) significantly reduces the construction time during the organization of housing and investment construction. In the article, the author also considers important aspects of the digitalization of construction production. The methodological design involves the method of sociological analysis, the method of expert assessments with subsequent statistical analysis of the data obtained as a result of the questionnaire, the method of mathematical modeling, and comparison. The results of the study made it possible to show that the Unified Information Platform raises the efficiency of relationships between participants in urban planning activities; reduces the total construction period of the facility by 12% (153 days); significantly decreases the cost of construction; the functionality of the Unified Information Platform allows to create a streamlined work process and establish timely control over the performance of work; the absence of such systems or only their local variants noticeably lose in efficiency; the introduction of the Unified Information Platform makes it possible, through electronic interaction, to control the vested interests of corporations and not allow the techno-structure represented by government officials to be subordinated; the use of information technology guarantees maximum efficiency and productivity while minimizing production costs.

The situation and solutions to develop Green Building in Vietnam

Housing in Vietnames megacities is quite expensive due to limited land availability. Besides, green housing investment requires higher implementation costs than non-green housing investments, plus a Green Building certification fee implemented by international organizations. Despite specific difficulties and problems, green real estate projects bring economic benefits to both investors and users in the long run. Green building development is a trend that is particularly interested in by governments and real estate developers. Through analyzing the current status of Green Building development in Vietnam, the authors have discovered barriers, limitations, and proposed solutions. To develop green buildings effectively, investors need to operate a 5-step process throughout the project life cycle, including Green planning — Green design — Green construction — Green operation — Green lifestyle. Using environmentally friendly materials, energy-saving efficiency in green housing is no longer an unattainable dream for urban residents in Vietnam.