Migration, one of the most debated topics of the 21st century, unsurprisingly dipped during the coronavirus pandemic. But its return will boost the fortunes of rented residential real estate, with smaller cities in the U.S. and Europe set to be the biggest beneficiaries.

Demand for purpose-built, professionally managed residential accommodation is poised to further intensify as cities around the world begin to bounce back from lockdowns and global net migration returns to pre-pandemic levels, Savills said in its Global Living 2021 report.

Multifamily residential overtook offices as the largest global investment asset class in the first half of 2021, Savills said, and its popularity will continue to grow.

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

In the U.S., 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. Immigration in Germany, already declining since 2015, was down 26% in 2020 over 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.

Savills said global migration would likely return to pre-pandemic levels by 2024, which would in turn put rents on a path to rise again. That's good for asset owners, not necessarily good for renters.

The report predicted that people would increasingly migrate to smaller cities that offer a high-quality and healthy quality of life. In the U.S. it said that Austin, Orlando and Phoenix would see the highest proportion of inward migration relative to their current populations. All will see migration of more than 10% of their current population, as will Calgary in Canada.

In Europe the cities with the largest relative migration will be Luxembourg City in Luxembourg and Zurich and Geneva in Switzerland.