Emerging financialization in Brussels: Institutional investment in niche rental housing markets

Abstract

In recent decades, institutional investment in rental housing has expanded into a wider range of localities and rental market segments, thereby further pushing the financialization of rental housing. As investment in single-family homes, multi-family apartments, student housing, (former) social housing, co-living, mobile homes, nursing and care homes, Built-to-Rent developments, and short-term rentals is increasing, niche asset classes are being mainstreamed into the capital flows of global real estate markets. However, there is little research that, on one hand, goes beyond ‘mature’ and ‘primary’ institutional markets where rental housing financialization has emerged under rather exceptional conditions (such as mass-privatization of social housing and severe consequences of the Global Financial Crisis), and on the other hand, attempts to gauge institutional investment across the rental market, including across niche asset classes. Through an in-depth case study of the Brussels Capital Region, we examine how and under which market and policy conditions institutional investment flows into an emerging institutional market where investment primarily takes places in niche asset classes. While recent studies have argued that institutional investment in rental housing is limited and, therefore, financialization still a marginal phenomenon, we argue that an in-depth market-wide analysis of institutional investment strategies is necessary for understanding how and to what extent rental housing financialization takes place. Finally, we argue that the patterns of emerging financialization we observe in Brussels may be applicable to other cities as well.