From a standing start five years ago Greystar has become one of the largest rented residential companies in the U.K. with 32,000 student and private rented residential units up and running or in the development pipeline. And it is expanding its assault on Europe.

The largest multifamily operator in the U.S. opened an office in Paris last month, following its moves into the Netherlands, Madrid and Vienna in 2017. Greystar operates 9,500 student accommodation units in Spain, 6,500 rented residential units in the Netherlands and 800 units in Austria.

It will use the template that served it so well in the U.K. to build scale in these markets, and its other main target, Germany: open up with a big acquisition, most likely in the student sector, then ramp up the development pipeline.

“Of course, the resident of Paris is not the same as that in London, or Amsterdam, or Vienna, but if you look at these large global cities then there are lots of similarities,” Greystar Senior Managing Director of Investment Management for Europe Steven Zeeman said. “There are similar demographics, an increase in one- and two-person households, a need for mobility and a lack of professionally managed, purpose-built rental product.”

Greystar entered the U.K. in 2013, buying a 7,100-bed student portfolio from distressed owner Opal for £300M. It also entered Spain and the Netherlands through large acquisitions. Zeeman said this was its preferred way of entering a new market, as large acquisitions allowed Greystar to understand a market quickly and more thoroughly, before undertaking new developments and building a development pipeline.

These acquisitions tended to be in the student sector because this market is more mature in Europe than private rented residential. He said the company was looking at potential acquisitions in Paris. It has hired Hideki Kurata from AXA IM - Real Assets, where he was head of real estate private equity, as directeur général for France.

The opportunity in Paris was similar in scale to that in London, where virtually all Greystar’s U.K. rented residential activity has been focused, Zeeman said.

“Paris is similar in size to London, it has a huge population and it is very expensive to buy or rent a house,” he said.

“A lot of the rented residential product has been condo-style buildings that have been broken up, and a lot of the student housing is run by individuals who receive tax breaks — there is very little purpose-built rented accommodation that looks to provide good amenities and build a community. In terms of the investors and developers it is still a very domestic market, and there must be room for foreign operators and investors.”

In contrast to countries like the U.K., France and Spain, Germany does have an institutional rented residential market: listed company Vonovia owns almost 400,000 units, for instance.

But Zeeman said the kind of product Greystar was looking to buy and build did not exist in Germany.

“If you look at what people call multifamily in Germany, it is either rental housing blocks bought from housing associations or smaller blocks that were built for sale as condos,” he said. “A lot of players in the German market buy those blocks and try to optimise value by forcing out lower-paying tenants and try and replace them with tenants that pay more: that is the typical value-add play. That comes with a lot of political and reputational risk. And it is not where residents want to live. We would rather develop purpose-built assets.”