2025 Global Outlook – The Living Sector

Despite the disparity of real estate cycles across regions, countries, and cities, the living sector probably has the most similarities across the globe. The housing shortage, which is well-documented in developed countries is a fairly universal phenomenon. That said, the degree of undersupply does vary across countries and product types.
The lack of affordability is creating significant demand for rental units, particularly in developed economies. Over 80% of households Hines analyzed showed clear momentum for renting over buying, with renting households growing much more quickly than home-owning ones.1 In many of these countries, the ownership of rental properties is extremely fragmented, with relatively little institutionally built, owned, and managed product.
Hines expects the wave of cyclical supply to slow in 2026–27, and then market rent growth should accelerate from its current lows.
As shown in the chart below, Hines estimates that U.S. NOI would have to increase about 15% or cap rates would need to decrease by 75 basis points (or some combination thereof) for new development to pencil at the national level, though the range of those estimates varies at the local market level. While there is still a gap, this is a notable improvement from a year ago (3Q 2023) when NOI was more than 20% lower and cap rates were more than 100 basis points higher than needed to kick start a new development.
In the U.S., the difficulty of homeownership attainment seems to be boosting single-family and townhome rental housing.