Auckland, October 2021 – Investments in the housing sector will rival the volumes deployed in traditional commercial real estate asset classes, including offices, over the next decade as capital allocations change and portfolios become more diversified. JLL’s latest research indicates that by 2030, a third of all global direct investment in real estate will be in ‘living’, up from 25% in 2020 and 14% in 2010.
The sector’s share of capital flows will continue to be supported by favorable demographic, economic and capital market winds, which will collectively drive expansion into established markets and accelerate growth in emerging Asia-Pacific markets and from Europe.
Analysis published in JLL’s Growth opportunities in life Research report shows that capital flows into the sector have accelerated over the past five years. Capital flows are more concentrated in the conventional multi-family or rental construction market segments as investors increasingly recognize the favorable return profile, growth opportunities and leasing fundamentals offered by these. specific living assets.
In 2020, approximately $ 200 billion of global capital was deployed in the housing sector by investors around the world, and with increasing urbanization and other factors, including housing affordability, investor appetite should increase.
âCompetition for live products has intensified globally, and there is no indication that investor appetite for this evolving asset class will wane. Recognizing the stable cash flow and operational resilience of the living sector, particularly through cycles and periods of economic uncertainty, investors and developers have aggressively entered and extended their market position and will seek to grow beyond established institutional markets, âsaid Sean Coghlan. , Global Director, Capital Markets Research, JLL.
Opportunities for the living sector depend on key demographic trends, economic fundamentals and local regulations, says JLL, all of which have resulted in the development of mature sectors in geographies like the United States, Germany, the Netherlands. Low and the United Kingdom.
According to Paul Winstanley, head of strategic advice for JLL New Zealand and Australasia Build to Rent (BTR), New Zealand represents one of the most opportunistic markets for BTR in the world, but it is severely hampered by its barriers. at the high entrance.
âNew Zealand is close at hand to benefit from substantial investment from the global housing market. BTR is an exciting industry for investors here, with significant growth opportunities. But, arguably, the biggest winners in New Zealand in an activated BTR market would be the everyday Kiwis, as this investment and development would raise the benchmark for rentals.
âWhile we are starting to see great progress with a small number of investors and pioneering developers delivering quality long-term rental deals, BTR programs in New Zealand are not widespread enough to make a real difference to most people in the rental market.
âJLL’s Growth Opportunities in Living report highlights the challenges New Zealand must overcome to bring BTR to scale. It is essential that we remove these roadblocks to avoid the risk of completely missing the BTR boat in New Zealand. “
Leonie Freeman, managing director of the Property Council New Zealand, said government housing policy, including regulations regarding who can own and operate assets, makes it more difficult for homeowners to enter the BTR market. , operators and experienced developers.
“The main thing holding us back are the high barriers to entry – barriers that could be easily overcome if the government was prepared to change a few political parameters,” Freeman said.
âBTR is already a reality in New Zealand, but its potential is limited by unnecessary legislative requirements. The coming weeks represent a critical time for BTR in Aotearoa, with the government due to make an announcement regarding sector support in November. “
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