What's on the Cards for the Commercial Property Investment Market this year?

January 2024

What's on the cards for the commercial property investment market this year, then?

We asked one of our partners, Chris Donabie... 

And this is what he has to say on the matter:

- On the investment front, 2023 was a difficult year. Rising interest rates and persistent high inflation resulted
  in significantly fewer investment transactions.

- With inflation coming down and a predicted lowering of interest rates through 2024 - this will help to
  stimulate the market.

- Investors should find good opportunities in 2024 because borrowers with high loan to values (LTVs) and
  looming refinancings will be under pressure from higher interest rates and potentially lower property values.
  Many of these investors will need to put more equity in - or risk distress - which could lead to some
  interesting opportunities arising in the market.

- Higher interest rates mean that debt-buyers have largely been out of the market which has contributed to
  discounted values. Equity-backed buyers should benefit from discounted prices.

- The gap between buyer and seller aspirations should close, with a greater number of deliverable deals in
  2024 as a result. 

- In terms of sectors, we expect that the industrial and residential sectors will remain popular with investors
  as they both still have greater potential for rental growth.

- The sustainability agenda continues to have an impact on investor appetite when pricing assets. This is
  particularly the case in the office and retail sectors. Indeed, rising interest rates have meant that it is more
  costly to refurbish or repurpose older buildings and investors are still not clear about improvements they
  need to make to meet ESG targets. This will continue to impact on value particularly with older, secondary
  and tertiary office and retail assets.

- With a general election not far off and the Tories trailing in the polls, the spring budget could be interesting
  as the government look to improve their popularity. Could they be about to offer some sweeteners to the
  property sector?

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