Tuesday, 23 May 2017

New horizons

I expect to see the first multinational housing associations become a reality over the next few years.

The European Commission is clear when it comes to housing: it is a national responsibility and this means national policy determines the structure of housing markets. However, it has no objection to housing providers operating in different European Union countries as long as they respect national law. In fact, cross-border operations (within the EU) are a major objective of the EU’s internal market that seeks to guarantee the free movement of goods, capital, services and people. National and local governments that have challenged housing associations’ decisions to invest abroad have lost in court over the past few years.

Of course, housing providers should not consider becoming an international landlord if they do not gain any significant benefits. As it happens, though, it is clear there are a number of important advantages.

First, in a tight capital market investors are interested in portfolios that have spread risks. A geographical spread is a bonus and will allow providers of capital to improve their offer. Moreover, the capital market will be extended to the different countries of operation and give a better access to globally operating investors.

Second, operating internationally guarantees that knowledge within the organisation will improve. Combining best practice from similar landlords with different cultural and historical backgrounds will lead to more efficient and effective performance. As an international operating organisation you will be able to attract the best available professionals.

Finally, there is nothing like one European housing market and even on a national level housing markets are fragmented. By operating in different markets and different segments of these markets you will be more flexible and ready to deal with demographic changes.

Although I see enormous benefits of internationally operating housing associations, there are a number of pitfalls that should be considered.

The aforementioned benefits can only be achieved when the organisation of activities and assets are managed well. This means that the operation on different markets should offer tailor-made solutions. I would also like to stress the importance of the local role that is performed by landlords. Proximity to tenants and other stakeholders (such as local governments and local providers) is an important key to success. Housing providers must make sure that by becoming international organisations they do not lose their ability to respond to local need.

The challenge, therefore, will be to bring the benefits that you obtain from being an international organisation to your tenants.

Corné Koppelaar is the founder of Global Habitat

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