Barry Jessup looks ahead to what he hopes this year will entail, from the UK's base rate to who will win the Euro's...
I suspect that most people in the property industry will be pleased to see the back of 2023. The challenges have been well-documented: construction inflation, higher interest rates, drifting investment yields, planning delays, retrospective building regs and lower transaction levels. It was certainly a difficult year for the sector, but there are lots of reasons to be more optimistic about 2024.
After a year of instability, it feels like we are climbing back out of the bottom of the cycle with the financial markets indicating interest rate cuts, investment yields which should start heading in the right direction, and a flat construction market. There is a lot of intelligent capital waiting to pounce on the right development opportunities, and there are definitely plenty out there when you adjust your spectacles from grey to a pinker hue.
So, let’s give everybody a chance to laugh at me in 12 months’ time with some bold (and less bold) predictions for 2024:
- UK base rates will be trimmed three times by a total of 100bps over the year
- Average commercial yields will compress, but the bifurcation of the market between Grade A* and everything else will continue apace
- House prices will bounce on the back of a flood of cheaper mortgages
- Generative AI will become a standard tool in reporting and analysis in real estate transactions
- Agricultural land suitable for vineyards will continue to increase in value
- Everybody will regret not having booked a week in France for the 2024 Olympics
- England’s men will win Euro 2024
At Socius, we will continue to try to push the boundaries of the beneficial environmental and social impact that our developments can have, and offer opportunities for innovation on all of our projects as we all strive to drag our industry into the 21st century. We are fortunate to have a wide range of exciting projects across different cities, which include high-quality offices, life sciences, homes and leisure/culture and I am really looking forward to seeing a lot of these on site this year.
And finally, my one wish for the year: whichever party wins the general election, let’s not turn the future of our planet into a cheap electoral battleground. Take responsibility and demonstrate the strong leadership that all of our children (and your future voters) are desperate for.