4th March 2026 – Europe’s current housing crisis could be significantly eased through a combination of stronger strategic partnerships between institutional investors such as pension funds and insurers, policymakers and planning authorities, greater policy certainty, and a longer-term political outlook, according to new research from INREV.
Published today, the paper entitled Institutional Investment in European PRS: Strategies, barriers and pathways to supply unveils new insights based on in-depth interviews with senior experts from some of the leading investors and fund managers, collectively accounting for around €770 billion in global real estate AUM.
The research finds that institutional investors have a strong appetite to address the housing crisis, which is substantiated by other research from INREV. In January’s Investment Intentions Survey, residential emerged as Europe’s first sector of choice for the third consecutive year, and the INREV Living Fund Index, also published today, reveals a one year rolling total return of 7.03% for 2025. Notably, the Living Fund Index outperformed the wider INREV Fund Index by 260 basis points over 2025.
Respondents to the Institutional Investment in European PRS paper welcome regulation and policy that support a well-functioning residential market. However, they also highlight that unforeseen policy changes can undermine their ability to deliver appropriate returns as part of their fiduciary responsibilities – i.e., future pension obligations. This, in turn, creates a barrier to investment that’s likely to exacerbate, rather than ease, the current housing undersupply – especially in the affordable segment.
The report notes that even well-intentioned policy initiatives – such as rent caps, land restrictions, and planning and building requirements – can have unintended consequences that impact where the burden of housing scarcity falls across society.
Policy uncertainty, therefore, is identified as the greatest risk for investors, with the report highlighting the need for greater alignment between institutional capital and policy. The risk of policy volatility and political expediency is now being overlaid on investment strategies to identify markets with heightened risk and uncertainty.
Additionally, respondents referenced inconsistencies across different jurisdictions as a key destabilising factor. Divergent building and planning standards across Europe create complexity, increase costs, and inhibit scalable solutions. Over-specification and poorly coordinated policies can undermine affordability and lead to overcrowding. Moreover, they are an obstacle to expanding the use of modern methods of construction (MMC), which has the capacity to lower costs, increase sustainability and accelerate housing delivery.
Commenting on the report, Iryna Pylypchuk, INREV’s Director of Research and Market Information, said: “The current misalignment between policy and investor needs has created a stagnant or two-tier housing market in many parts of Europe as natural rates of churn evaporate, resulting in a misallocation of housing. This is having a wider economic impact on the European economy and society, such as declining labour mobility, overcrowding and a delay in life stage decisions.
Europe cannot build its way out of the housing shortage without private capital. Yet, changes to regulatory frameworks can enhance or entirely undermine business plans. To unlock the pent-up wave of patient institutional capital that’s poised for deployment and so accelerate the delivery of much-needed affordable housing at scale across Europe, policymakers must take a longer-term perspective. And where policies are being revised, the implications for institutional capital and its capacity to contribute to housing delivery should be explicitly considered”.
A number of market participants who contributed to the research paper underlined the need for a more streamlined approach.
Guido Verhoef, Head of Private Real Estate, PGGM Investments, said: ‘’ Institutional capital plays a pivotal role in addressing Europe’s housing crisis; however, its effectiveness depends heavily on the presence of stable and reliable policy frameworks. In addition, non-institutional capital and innovative approaches, like industrial housing, are equally important to overcome the complex challenges facing the European housing sector.”
Nigel Allsopp, Managing Director, Investment Strategy, Greystar, said:” Europe's housing crisis generates a great deal of noise, but this research cuts through to the core issues. The recommendations are clear: stabilise regulatory frameworks, streamline planning processes, support modern methods of construction — and institutional capital will follow."
Dennis Lopez, CEO, QuadReal Property Group, said: “Government and Institutional Investors are natural partners to address Europe’s housing crises. The foundation for this partnership is consistent policy and stable, predictable regulatory frameworks.”