Residential



Residential real estate, or ‘Living’ sectors, typically spans multi-family and single family housing, affordable housing, senior living and purpose built student accommodation. We believe that the defensive nature of housing and acute supply and demand imbalances in many markets offers long-term attractive rental growth prospects and the potential for strong risk-adjusted returns. 

Living sectors can also offer improved capital preservation and diversification potential versus other asset classes and real estate types. Underpinned by diversified cash flows from leases to individual residents, investing in Living sectors may offer the potential to mitigate against higher inflation through mark to market rental increases or index-linked rental uplifts, which can be an attractive feature for long-term investors, in our view.

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Demographic trends suggest that demand for housing will continue to rise across the board. Yet supply is limited across UK Living sectors, underpinned by decades of underdevelopment, driving long-term house price growth. This is likely to continue to fuel demand for rented accommodation and place upwards pressure on rents.

The Living sectors therefore offer a potential robust stream of long-term income, with attractive rental growth prospects. Investors can also benefit from diversifying characteristics, which can be elevated by investing across the spectrum of Living sector assets, with the potential to enhance a portfolio’s risk-adjusted return. Professional investors have the scope to further optimise returns through specialist asset management.  

Our strategy targets standing assets and forward fundings to deliver well located, high quality homes that meet people’s needs at every stage of the Living lifecycle – from private rented to senior living. Through careful stock selection and hands-on asset management combined with efficient property management, assets are actively managed seeking to generate potentially strong and sustainable income returns. 

M&G is a leading manager of residential real estate with more than 20 years’ experience and having launched one of the UK’s first institutional Private Rented Sector funds in 2013. With a robust platform and dedicated team of sector experts, we manage over £3 billion1 of UK Living sector assets. The M&G UK Residential Property Fund achieved 5 stars in the 2023 Global Real Estate Sustainability Benchmark (GRESB) Survey, ranking top in its peer group2.

1 M&G as at 30 June 2024.
2 GRESB ratings should not be taken as a recommendation. Find out more about GRESB

Demographic trends suggest that demand for housing will continue to rise across the board. Yet supply is lacking across EU Living sectors, driving long-term house price growth. This is likely to continue to fuel demand for rented accommodation and place upwards pressure on rents.

The Living sectors therefore offer a potential robust stream of long-term income. Investors can also benefit from diversifying characteristics, which can be elevated by investing across the spectrum of Living sector assets, with the potential to enhance a portfolio’s risk-adjusted return. Professional investors have the scope to further optimise returns through specialist asset management. 

Our strategy targets standing assets and forward fundings to deliver well located, high quality homes that meet people’s needs at every stage of the lifecycle – from private rented and Purpose Built Student Accommodation, to Senior Living. Through careful stock selection and hands-on asset management combined with efficient property management, assets are actively managed seeking to generate potentially strong and consistent income returns.

Leveraging 20 years of experience in the UK Living sector, M&G expanded its reach into Europe in 2023. With a robust platform and dedicated team of sector experts on the ground, we manage over €5 billion of Living sector assets globally3.

3 M&G as at 30 June 2024.

Affordable housing both for rent and for sale is in critical need in the UK, given house price affordability constraints and stretched rental affordability in major cities. With an acute shortfall in the amount of affordable homes being built on an annual basis, institutional capital could be integral to the solution.

Investing in affordable housing can offer access to defensive and stable cash flows, whilst also helping to alleviate the housing shortage. In the case of Shared Ownership housing, investors can benefit from inflation-linked income with exposure to house price growth as occupiers acquire more equity in their home.  

Our strategy seeks to broaden access to housing for people who cannot afford to buy or rent on the open market, including families with low to moderate household income and key workers, and provide high quality homes and services to the benefit of residents. With 20 years of experience in residential real estate and a dedicated team of sector experts, we manage over £3 billion4 of UK Living sector assets across Private Rented Sector housing, affordable housing, Purpose Built Student Accommodation and Senior Living.

4 M&G as at 30 June 2024.

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