News/Real Estate Finance

UK. Real estate market showing signs of optimism.

Real Estate Special Spring 2024: UK.Real estate market showing signs of optimism.

Last year, the UK economy had to contend with a number of adverse factors, which led to it slipping into technical recession at the end of the year.  The challenging economic conditions were also reflected in the UK real estate investment market. Transaction volume fell by around a third in 2023 to £ 43.3 billion, with the decline affecting all asset classes.

A new study provides a brief overview of the macroeconomic environment before examining how the individual office, retail and residential asset classes are developing against the backdrop of current economic and geopolitical parameters and a selection of megatrends. The report analyses the future prospects for the individual asset classes, taking into account economic uncertainties and structural particularities, and presents the risks and challenges that may need to be considered.

“Sustainability is extremely important across all asset classes. Given that the UK has one of the longest-standing inventories of properties in Europe, and that further tightening of energy efficiency standards in the real estate sector is expected, the need for the energy-efficient refurbishment of both commercial and residential buildings will be accordingly high in the years ahead,” says Ingo Martin, Head of Deutsche Hypo – NORD/LB Real Estate Finance Origination. “The anticipated reduction in key interest rates is likely to stimulate the leasing and investment markets appreciably in the second half of 2024,” Claudia Nacke, Head Real Estate Finance London, adds. “However, it can be assumed that interest rates will remain at a higher level than in the preceding decade, which is likely to make it more difficult to utilize borrowed capital for acquisitions. Even if the current geopolitical and macroeconomic environment remains volatile, we are seeing more and more positive signals on the UK real estate market. Opportunities are emerging in particular for investors who account for sustainable and digital transformation and, in doing so, create marketable real estate that retains its value.”

The situation on the British real estate market and other European markets will also be a topic of discussion at the MIPIM international real estate exhibition, which will take place in Cannes from 12 to 15 March 2024. Deutsche Hypo – NORD/LB Real Estate Finance will be exhibiting at the German Cities & Regions Pavilion at a joint booth together with state capital Hanover, the Hanover Region and KSB Intax (booth R8.D24).