Catella launches €500m affordable German housing fund

Catella Real Estate AG, the investment management company of listed Swedish group Catella AB, has launched a new open-ended fund to invest in affordable German housing. The fund has already made its first investment, an apartment building in Mainz for €25m.

The Catella Modernes Wohnen open-ended mutual real estate fund for small-scale, affordable living will focus on one- and two-person households in German conurbations and has a target volume of around €500 mln.

Catella says that more than 75% of households in Germany are one- and two-person households, but one-room apartments account for just 3% of Germany’s housing stock; if 2-3-room apartments are included, the share is 30%. The average residential unit size realised in new construction is around 95 sqm. In addition to students, the target group for affordable living also includes commuters, young professionals and senior citizens.

Catella said that further projects for micro living, student accommodation, housing for senior citizens and temporary accommodation (boarding houses) are already in the due diligence phase. The fund is targeting overall returns of 3.5-4.5% per year.

According to Michael Keune, portfolio manager at Catella, 'We are talking about approximately 10-12 million households looking for affordable housing in urban areas. That doesn’t work on 80-100 sqm, but has to be realised on 20-50 sqm to keep overall rents at reasonable levels.'

'Catella Modernes Wohnen aims to provide affordable living space to the largest group of users of residential accommodation – Germany’s rising number of one- and two-person households.'

The fund has made its first investment of €25m in an apartment building in Mainz, situated within walking distance of the city's railway station. Scheduled for completion in September, the property has 77 single and 65 double apartments. The building is part of a micro living complex with additional services and student apartments also acquired by Catella-managed funds.

In total, Catella has now invested in around 900 apartments for students, young professionals and commuters at the Mombacher Strasse location in Mainz.