Residential property becomes biggest global real estate investment

Residential property becomes biggest global real estate investment

In the first six months of this year, global real estate investment totalled US$687 billion. The amount represents a slight decrease (-2.9%) on the same period in 2020. However, investment in Q2 increased by 4.2% as travel restrictions eased in many parts of the world.

Multi-family becomes preferred sector

Figures for global real estate investment between January and June this year reveal that the sector has seen a shift in preferences. According to research from Savills, multi-family rental properties (with at least ten units) became the most preferred investment vehicle.

In H1, investors poured US$131 billion into residential real estate, a rise of 30% compared to 2020. This increase takes multi-family investment to the head of the asset table and ahead of offices, traditionally the largest sector.

Despite lockdown and new remote working trends, investment in offices globally reached US$124 billion. The uptick in Q2 was particularly pronounced (+13.9% on Q2 2020) as more employees returned to offices to work instead of from home.

Berlin biggest investment hub

In geographical terms, the German capital saw the biggest investment in the first six months of this year. According to Savills, a residential transaction to the tune of US$23 billion drove investment levels in the city to their highest ever.

Topping the table for the first time, Berlin experienced a 504% increase in H1 compared to the same period last year. Moreover, the uptick was 55.3% higher than the city’s next competitor, Los Angeles.

US cities dominate rankings

Cities in the US dominated the top ten most popular spots for global real estate investment in the first half of this year. Joining LA were San Francisco and New York, in third and fourth places, respectively.

Smaller cities such as Dallas, Boston, Atlanta and Miami brought the US total in the top ten to seven. According to Savills, their presence confirms investors’ appetite for regional locations outside the largest cities in the US.

Joining Berlin and the seven American cities were London and Seoul. London took sixth place with over US$12 billion in investment as interest in the British capital grew. Real estate in the Korean capital benefitted from foreign capital inflows with those from China at the forefront.

Outlook for global real estate investment

For Savills, the multi-family residential and office sectors will continue to attract large-scale global property investment in the short and medium-term. “They will continue to be priorities for investors around the world given long-term structural change,” said Simon Hope, Global Head of Capital Markets at the company.

As far as location goes, Savills points to key cities as “safe havens for investors”. However, it also highlights the potential for smaller cities when large portfolios of multi-family investments become available. 

(Source: Savills)