Canadian pensions, Asian wealth funds eye single-family home rentals

Foreign investors account for almost a third of institutional investment in the sector

National /
Apr.April 13, 2021 10:21 AM
Canada’s Public Sector Pension Investment Board CEO Neil Cunningham (left) and Allianz SE CEO Oliver Bäte (PSP Investments, Allianz, iStock)
Canada’s Public Sector Pension Investment Board CEO Neil Cunningham (left) and Allianz SE CEO Oliver Bäte (PSP Investments, Allianz, iStock)

If you rent a home in the suburbs, your landlord could be a Candian pension fund or a Middle Eastern sovereign wealth fund.

Foreign investors are increasingly targeting the single-family home rental market as more American flock to the suburbs for larger spaces.

Foreign investors now account for almost a third of the institutional investment in single-family rental homes, according Alex Foshay, head of international capital markets at real-estate services firm Newmark, the Wall Street Journal reported. Previously, these investors were almost non-existent in the sector.

In January, Canada’s Public Sector Pension Investment Board said it would invest in a $700 million rental-home venture through a partnership with Pretium Partners. Last month, German insurer Allianz SE announced a $300 million investment in a venture with American homebuilder Lennar to convert houses and townhomes into rentals.

And Singapore’s sovereign-wealth fund GIC plans to invest in single-family rental homes across the southeastern U.S, the Journal reported, citing people familiar with the matter.

Single-family rental homes have become an increasingly hot investment thanks to a dwindling home supply but high demand. An index that measures rents and occupancy rose 5.7 percent for single-family homes rose, while it declined for the broader real estate industry.

More than 50,000 single-family rental homes were built during the 12 months ending Sept. 30, 2020, according to John Burns Real Estate Consulting. That’s about two-thirds more than the average over the past four decades.

[WSJ] — Keith Larsen


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