Living sector to take up one-third of global real estate investments by 2030

The sector is expected to overtake office and retail.

The living sector will take up one-third of global real estate investments by 2023, overtaking its commercial real estate asset classes, including office.

In 2020, the sector only accounted for 25% of investments, receiving approximately $200 billion capital from global investors.

As for the capital flows, JLL said the sector, which saw growth in the past five years, will continuously be supported by “favorable demographic, economic and capital markets tailwinds.”

​​“Structural tailwinds are poised to persist, providing current and future support for investment into living, especially given the sector’s ability to adapt quickly to market conditions and generate strong and consistent returns through cycles,” Sean Coghlan, global director of JLL’s Capital Markets Research, said.

‘Opportunities in the living sector’

Based on JLL’s analysis, opportunities in the sector are underscored by five demand drivers and considerations.

The first demand drive is urbanization. JLL said both the young and old generations have embraced the “desire to reside in core, walkable and lively neighborhoods.”

In-migration, or population movement within cities, has also been “a key consideration in living demand,” according to JLL.

“Many residents relocated from small units in the urban core to spacious accommodations in the suburbs; however, the long-term trend continues to favor urban submarkets,” the analysis stated.

Another demand driver is demographic fundamentals. Rental housing offerings are no longer reliant on younger age cohorts, and are now attracting  “wider swaths of the population,” JLL said.

The fourth driver is housing affordability. The report stated that “for-sale accommodations have become increasingly unaffordable to much of the population across the globe,” with the median home price becoming more than twelve times the median household income across 24 markets.

Lastly, local regulations such as zoning laws in urban markets can also impact the feasibility and scope of rental and for-sale housing markets, according to JLL.

“Policymakers may implement rent controls to combat housing unaffordability, impacting income returns,” JLL said.