Global Rental Market Boost Led by States

Rental apartments are proving to be a sound investment in top global real estate markets, led by the United States but also strong in Germany, the latest Global Perspective analysis report from JLL suggests. Rental growth in the US accelerated to its highest pace in the first quarter of 2016 and all major markets registered positive absorption.

It also says that institutional investment volumes continued to grow in Europe, with Germany achieving a record year for transaction volumes and the UK market expected to gather speed through 2016.

However, sales activity has continued to decline in Dubai, although falls in prices have been modest. While in Asia, an accommodating policy stance, including a cut in interest rates, has provided support for high end sales volumes in China.

In the United States rents have accelerated nationally to 4.3% growth year on year, representing the fastest rate of increase this cycle and the largest advance since the second quarter of 2008.

The report points out that 13 markets have seen rental growth in excess of 5% year on year, with Western and Southeast regional markets seeing the greatest uplifts in rents. Yearly absorption on a national level continues to be unchanged at 1.6%, with all major markets demonstrating positive absorption.

The residential investment market in Germany achieved record volumes in 2015, with more than €5 billion traded in the final quarter alone. Over the year as a whole, €25 billion and almost 360,000 apartments changed hands.

Some 20% of national sales, measured in terms of turnover, of residential properties and portfolios took place in the Greater Berlin area, followed at some distance behind by Hamburg at €880 million and Frankfurt at €780 million. The trend towards higher yielding residential products, particularly new build projects, micro-apartments and student residences, will be sustained over the coming year and a transaction volume similar to 2015 levels remains achievable.

The Swedish residential investment market also continued to perform well in 2015, accounting for approximately one third of total real estate investment volumes at €4.1 billion, slightly below 2014’s total of €4.4 billion.