San Jose edges Houston for top spot in our rankings

Apartment markets have started to fare slightly better this year as inventory growth has eased, and we expect this trend to continue. We expect absorption to outpace new supply by a wide margin in Southern cities such as Houston, Atlanta and Austin, lifting occupancy and rents. However, San Jose claims the top spot in our rankings, where structurally tight supply and a boost from the AI boom should drive strong NOI growth, supporting total returns of around 9.5% p.a. over our five-year forecast. Miami, D.C. and NYC will be much weaker performers, held back by persistent supply headwinds.