Larger deals drive investment market recovery

Signs continue to build of a strengthening global living investment market. The U.S. saw the return of bigger-ticket transactions in Q2, while yield stabilization in Europe has also contributed to the return of larger deals. Overall investment volumes in the U.S. living sector were up 16% compared with the previous quarter, and EMEA living investment nearly doubled its Q1 figure. Asia Pacific investment was also up on the first quarter, albeit on much lower volumes compared to the other two regions. Living investment activity will continue to strengthen throughout 2024 as global markets stabilize and central banks implement modest rate cuts.

Overall, US$22 billion in U.S. multi-housing volumes closed in Q2, up from US$19 billion in Q1. Living alternatives in the U.S. are continuing to ride momentum as they offer additional income diversification from the broader rental multi-housing market. In Europe, living markets now account for the largest share of direct investment across the region, with investment volumes rising by 13% on the same period last year. In Asia Pacific, structural drivers continue to be stronger, although elevated global interest rates weighed on activity during the second quarter, which improved on the first quarter but was still 27% lower than the previous year.

Future trends: Living sectors to account for a growing share of transactions globally

Short-term: Living investment activity will continue to strengthen through the rest of 2024 as global markets stabilize and many central banks implement modest levels of rate cuts. Living will cement its position as the largest investment sector in EMEA as well as the United States. Larger deals will become a more common feature of the market as we move into 2025.

Long-term: Falling mortgage rates across many markets will strengthen the position of aspiring home purchasers, but only modestly, with affordability pressures already at breaking point. Increasingly large proportions of the populations of countries such as the U.S, Canada, UK, France, Germany, Australia and Japan will rely on income-driven housing models to satisfy their housing needs. Capital flows will continue to strengthen against the long-term growth trajectory in major living markets.