Global Shortage, Global Opportunity – March 17, 2025
We’ve been hearing repeatedly that there’s a housing shortage in the U.S., leading to an affordability crisis. However, global investor Hines makes it clear that the problem isn’t uniquely American.
The global housing market across a group of key developed economies that Hines Research analyzes “tells us that we need a net 6.5 million housing units to meet current demand,” according to Hines’ newly released Global Living Reimagined research paper. “This lack of supply has caused a global affordability crisis, putting many major markets out of reach for potential homebuyers.”
The solution adopted by many U.S. households—renting—is similarly finding favor worldwide. More than 80% of households in the developed economies Hines analyzed were in country markets showing clear momentum for renting over buying. These tend to be markets with strong job growth but a lack of for-sale housing to complement that growth.
Accordingly, “investors and owners need to stay keenly aware of the need for housing supply and where they may be able to add it,” said Joshua Scoville, head of global research at Hines. The trend toward renting over owning may continue accelerating, albeit not at the same rate in all regions. That means implementing region-specific strategies, according to Hines.
The key drivers of what Hines calls the living sector depend on which region you’re looking at. In the U.S., “home prices have reached unprecedented levels of unaffordability and the opportunity for traditional multifamily apartments remains compelling,” according to Hines.
Hines Research found that in comparison to owning a home, “renting is the most affordable it’s been since 1980. Additionally, as Millennials age into their prime child-rearing years, there has been increased demand in the single-family rental (SFR) market.”
The European market includes similar demand drivers for investors but also presents a specific opportunity emerging in the student housing sector. “An influx of international students has helped spur rent growth around certain European universities,” Hines reported. It also found that several major markets, including Paris and Milan, face significant housing shortages, although more generally, France and Italy favor buying over renting. Conversely, while the U.K. overall is seeing a shortage, the Birmingham market appears to have struck a balance between supply and demand.
Investor demand for the overall living sector has begun to pick up in the Asia Pacific region, and the epicenter appears to be Japan, where the for-rent residential market is well-developed. A key driver there is the capital markets: “The market has benefitted from a secular upswing in transaction volumes coinciding with significant cap rate compression,” reported Hines.
If Japan’s inflation and wage growth persist, Hines expects to see even more convincing rent growth and stronger values driven by a secular shift in rental growth. Global investors have also been focused on the potential for the Australian build-to-rent market, and South Korea is a geography Hines believes is poised to evolve into an institutionally investible market.
“We’ve been closely watching demographics as one of our key macro trends for years, and the global living sector is a direct reflection of the impacts that changing demographics, combined with economic shifts, can have on the built environment,” said David Steinbach, global CIO of Hines. “From an investor’s perspective, this current evolving landscape makes the living sector – whether traditional multifamily, single-family rental, or other variants like student accommodations – increasingly compelling. We expect to see significant investment activity in global living in the coming year.”