IMMO’s co-founder Samantha Kempe explains how tech is helping institutional investors access single-family rental (SFR) and in the latest episode of BossCast with Andrew Teacher, she sets out her stall for why the most sustainable buildings are the ones already built.
Until recently, institutional investment into residential real estate had been limited to multi-family housing - or large-scale apartment blocks for rent. But with more capital chasing fewer opportunities and the costs of construction rising fast, investing into standing assets has become more attractive. The problem is that markets across Europe and North America are dominated by non-professional investors.
In Europe alone, this is potentially a €50 trillion opportunity, yet 98% of the stock sits in the hands of private owners.
IMMO, which recently raised $75 million in Europe’s largest ever series B proptech funding round, aims to overcome obstacles such as fragmentation and lack of scale through the smart use of data and technology.
Recent BossCasts with Aviva-backed Packaged Living and with Man Group have discussed how major investors are creating their own single-family housing platforms by either forward-funding or developing from scratch. IMMO has already secured $2.5 billion in capital commitments from leading institutional investors, and aims to acquire 10,000 homes across the continent by 2024.
“Using manual processes, it is completely inefficient to be able to source, acquire, value and then manage thousands and thousands of units in disparate locations at the same time,” explains Samantha Kempe, IMMO’s chief investment officer. “So you can completely understand why it hasn’t been done and the fact that technology is needed to be able to do this.”
According to Kempe, IMMO’s platform rests on three pillars: work-flow automation, data gathering and data analysis. “We’ve looked at the entire value chain, broken it up and put it back together with technology,” she says. It’s all about “having the right data infrastructure in place, and the right data culture.”
Post-purchase, IMMO ‘upcycles’ homes into modern, energy efficient properties. “We are taking institutional capital and using it to acquire individual houses and apartments, upgrade those properties and then deliver them back to the rental market to create a better quality product and consumer experience,” Kempe claims.
IMMO’s approach to ‘upcycling’ is similarly underpinned by the integration of technology and data. “If you know what something should cost and how it will impact rents, then you can decide quickly whether it’s worth the spend,” Kempe explains. “This kind of thinking could be hugely valuable to the wider asset management industry.”
“We’ve created our own inspection app to collect more than 250 data points for every asset. Data such as floorspace or number of rooms. But when you start combining those with ceiling heights, you can automatically calculate the surface of walls and work out the costs of repainting or redoing the electrics,” Kempe continues.
With the built environment being one of the worst offenders when it comes to carbon emissions, greening Europe’s housing stock will be key to meeting governments’ ambitious net-zero targets. Institutional investment has a key role to play here, IMMO’s co-founder argues.
“One of the amazing things about targeting existing properties, is that doing so is inherently the more sustainable option versus new-build,” she says.