Rising activity in emerging living markets

Global Real Estate Perspective February 2024

Global housing markets continue to see a rise in renting and a fall in home purchasing against a backdrop of constrained affordability. Pressures are mounting in many rental markets, with housing supply falling and demand growing. Long-term structural trends including aging populations, demand for education, and limited housing availability continue to underpin investor conviction for living investment strategies.

Despite challenged capital markets, living investment reached its highest share of total real estate investment on record in EMEA and Asia Pacific during 2023. In the Americas, however, living volumes declined sharply with the multifamily sector facing short-term supply pressures; nonetheless, activity is expected to rebound to pre-pandemic levels over the next 12-18 months. Living alternatives such as single-family rental (SFR), student housing and co-living continued to generate interest globally as investors focus on diversifying income.

This article is part of JLL’s Global Real Estate Perspective

Future trends: Living sectors will remain a bright spot

Outlook for 2024: JLL forecasts 1.3 million new home starts in the U.S. during 2024, which will track slightly below the average new household formation rate and maintain the supply gap. Multifamily completions are spiking and leading to oversupply dynamics in high-growth markets, but absorption should keep pace with new deliveries nationally and hold overall occupancy steady. In Europe, the three largest economies – Germany, France and the UK – have been gripped by a steep fall in housebuilding due to rising building and debt costs and developer insolvencies, which will keep occupancy elevated and push rental growth higher. Rising costs and challenges for developers have also led to slower construction starts in many major markets across Asia Pacific. This is contributing to the emergence of an institutional multifamily market in China, Australia and elsewhere, while also boosting demand for other living property types such as co-living, senior housing and student accommodation.

Long-term: Efforts to provide adequate new housing for the approximately 80 million new urban inhabitants around the world every year have repeatedly fallen short, but for some countries 2024 will represent a new low as housing construction declines in many major markets. Affordability constraints, regulatory changes and structural demographic shifts – including aging populations, rising tertiary education and shifts in household formation rates – will drive long-term demand for a broad range of housing types and sizes.