Multifamily rental fundamentals in the U.S. remained strong through the third quarter of 2018 despite the wave of new supply being delivered. In fact, the supply pipeline has not hindered national vacancy rate declines, as vacancy fell 15 bps to 4.7% while rental growth accelerated slightly to 3.9%. Several Sunbelt markets, notably Las Vegas, Orlando and Phoenix, continue to bolster sector fundamentals, while cities with high development activity, including Dallas, Nashville and Seattle, have seen rental growth fall below the national average. Development activity across the U.S. is projected to continue into 2019, although there is likely to be a divergence in performance between core urban markets, which remain the major focus for developers, and suburban submarkets.
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U.S.: Multifamily Residential
Refers to rents for en-bloc rental apartment communities Source: JLL, October 2018
EMEA: Central City
Refers to rents for residential units in the central areas of each city Source: JLL, REAS, October 2018
AP: Prime Residential
Refers to rents for prime residential units in each city Source: JLL, October 2018
Source: JLL, October 2018
While the overall UK residential market slowed down during Q3, with transactional activity in London down 25% year-on-year institutional investment continues unabated and 2018 volumes are set to be close to £5 billion – more than double 2017. International investor demand, driven in part by the weaker pound, is increasingly being complemented by a growing domestic investor base.
In Germany, volumes are expected to be around €18 billion, with third quarter investment totaling €3.5 billion. Despite low initial yields, international investors remain positive about the market, with players from the U.S., UK and France active so far this year.
Momentum in Shanghai’s high-end market held strong, while sales volumes for villas and luxury apartments in Beijing decreased. The proposed vacancy tax in Hong Kong has led to less aggressive pricing for new projects. Buyer sentiment started the quarter on a strong note; however, sentiment has weakened recently as uncertainties related to the economic outlook and new vacancy tax set in.
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