The multi-family residential renting model has become very popular recently, given that it has always been associated with a history of defensive growth, with an environment of structural risks in retail and end of cycle risks in the office segment. But now, Morgan Stanley analysts suggest, the introduction of norms freezing rents in Berlin has provoked understandable concerns not only in Germany but also in countries like Spain and France.
According to the MS market commentary, in Spain this has begun in Catalonia following the approval of a law to limit rental prices. In addition, these must not exceed the reference rate of 10% in areas and cities where there is a lack of access to accessible housing in flats of less than 150 m2. According to the platform Idealista, some lawyers believe that this law is potentially anti-constitutional.
Supply/demand tendencies have allowed these companies in these countries to benefit from a growth in rentals above inflation levels without a CapEx which justifies it. The challenge, therefore, for REITS companies is to find a balance between the growth in rentals and the returns.
We remain positive about Colonial, Merlin and Metrovacesa.
