Introduction

Report Highlights

Global migration and mobility

The movement of people for work and study has been slowed by the pandemic, but only temporarily

Implications for operational real estate

The migration of large numbers of people for work and study across the globe has fuelled the demand for professionally managed residential accommodation over the last decade driving the operational real estate sector to new heights.

The Covid-19 pandemic paused some of that flow of people, but only temporarily. Cities have started to bounce back from lockdowns, in particular smaller, dynamic European cities. Domestic students have filled the gap left by international ones in many markets.

Looking ahead, forecasts suggest that global net migration will return to pre-pandemic levels by 2024. This will, in turn, further fuel demand for operational residential product.

Climate change, perhaps the greatest challenge facing us all, is another factor that will shape the sector in the years to come. With embodied carbon accounting for 11% of all global carbon emissions (rising to 40% when factoring in operational carbon), sustainable methods of construction and redevelopment will be key as new, more sustainable product is built to meet rising tenant demand.

Migration trends

Migration of people between cities for work and study is a key driver of residential rental markets of all types. The Covid-19 pandemic, however, has had a major impact on these trends.

In the United States, approved immigrant visas plummeted nearly 50% from half a million in 2019 to just over 240,000 in 2020. Australia has seen a decline of over 70% as a result of pandemic related border closures. While immigration in Germany, already declining since 2015, was down 26% in 2020 on 2019 levels.

This has been a factor in slowing prime residential rental markets. Savills Prime World Cities rental index recorded an average increase of 0.5% in the first half of 2021. This follows a fall of 1.8% through 2020 as global restrictions on travel reduced demand, due in part to the absence of corporate relocations. Kuala Lumpur, Hong Kong and New York were particularly impacted and saw prime rents decline by more than 4% in the first half of 2021 as travel restrictions limited the number of international tenants. Madrid, Paris and Amsterdam also recorded rent falls over the period.

By contrast, cities such as Miami have benefitted from domestic migration to sunbelt destinations, and so have seen overall rent increases.

Rental collection rates remain high. In the United States, multifamily housing rent collection for June 2021 stood at 95.1% according to NMHC, continuing the trend of high rent collection despite the pandemic.

_{Read the articles within Spotlight: Global Living (Part 2) – 2021 below.}