BE News asked leaders from across the built environment industry to share their hopes, fears and expectations for 2025. A whopping 125 of you responded, so to make this year’s mega forecast more digestible, we have broken it down into parts and will publish a fresh selection of ‘25 for ’25’ every day this week. Enjoy part three!
Mickola Wilson
Joint owner and director, Seven Dials Fund Management
It is only January, but to invert the folklore saying, 2025 will come in like a lamb and go out like a lion.
There is an optimistic upbeat message from many commentators, who expect house prices to grow, boosting the feel-good factor for the man in the street, and the anticipated reduction in interest rates will encourage new investment by the business sector.
But… the honeymoon period for the new government rapidly faded after the Budget, and as the rise in NI feeds into inflation figures, this will slow down the potential for further cuts in interest rates. Given the sluggish economic growth and abysmal levels of productivity in the UK, investors will remain cautious, until they see real improvement in future growth prospects.
While there is every hope that property performance will move into positive territory during 2025 (Savills is forecasting total returns of 7.25%), in my view it will be slower and less exciting than our more bullish pundits believe.
But in case you think I have forgotten my estate agency roots I should add that this will create a marvelous opportunity for the real risk junkies.
Crispin Gandy
CEO, ARGO Real Estate
We are positive about the prospects for 2025 but hope macro-economic challenges don’t kill off what looks like continuing shoots of recovery. Urban logistics, for example, is returning to investor radars due to attractive tailwinds and the positive outlook for rental growth. Robust occupier demand is being driven by the long-term expansion of e-commerce and supply of quality space remains tight for multiple reasons including alternative land use competition.
Brown-to-green strategies that reposition assets to provide in-demand accommodation with strong ESG credentials look particularly appealing. But local market knowledge, stock selection and asset management expertise will be key to delivering rental performance – a significant driver of returns moving forwards. Higher rates and elevated gilt yields could slow the market’s recovery before it has really begun. However, investing at this early point in the cycle, together with strong fundamentals in sectors like urban logistics, should mean opportunities for savvy investors.
Alan Pepper
CEO, Orega
Businesses that haven’t already will take action to mitigate the recent Budget changes; reflected in the Bank of England’s recent more bearish view on the economy. London will continue to grow while the market across the rest of the country will probably remain flat. That said, Grade A office rents in the regional cities are likely to continue their recent upward trend, driven by a shortage of good quality stock and cost inflation, which should lead to increased demand for high quality flex space.
Politics in the UK will be fraught as the new government confronts its tough choices, with an emerging concern about mid-term tax rises. The US political changes will add to uncertainty in the shorter term. From our perspective I expect the flight to quality, amenity rich, flexible workplaces will continue as business continue to encourage office-based working and underpin that with greater investment in their working environments.
Tristram Gethin
Founding partner, Quadrant Estates.
Although macroeconomic uncertainties could taint 2025, demand for quality workspace has been strong and keep should firming up. We expect the reduction of corporates’ office footprints to go into reverse with the balance shifting to a preference for office-based collaborative working together with increasing return-to-the-office mandates. There are more and more reports of occupiers now taking on additional space after downsizing too far.
We hope the onward march of the high-growth fintech, technology and life sciences sectors continues, and their need for talented workers and ESG ambitions drive their hunger for best-in-class workspace. Revolut’s take-up at our YY London office building in Canary Wharf in 2024 is a prime example of this demand.
From an investment perspective, the market could derail if geopolitics sees the reduction in interest rates slow or reverse. However, assuming rates keep trending downwards, we will see more long-term investors gravitate towards Grade A real estate as returns become more attractive versus the risk-free rate.
Samuel Castle
Founding partner, Tri7 Group
The UK property market is well-positioned for a strong year. Recent political clarity in the US and UK has provided investors with a clearer roadmap for the future, which we hope will be reinforced by the Bank of England sensibly implementing interest rate cuts so that the cost of debt settles and reaches more recent market norms.
Having accumulated dry powder during the past 18-24 months of uncertainty, investors should re-enter the market with renewed energy. The first half of the year is likely to witness a surge in transactions as this pent-up demand is unleashed. Beds and sheds will perform the best and attract core investors, but keep an eye on the office market: with robust occupancy rates in major cities, it is set for a resurgence. We’re optimistic about the year ahead. Those who continue to make sensible, long-term decisions will deliver strong, risk-adjusted returns for investors.
Jo Cowen
CEO, Cowen + Partners
‘Survive until 2025’ was the industry’s mantra last year, but while 2024 certainly had its challenges, with the residential sectors particularly constrained, there were growth areas. The alternative residential sectors, including PBSA and co-living, saw some of the highest levels of interest among investors with more of these schemes looking to come forward across the UK this year. While we are seeing more activity in the Living sectors and regeneration schemes, this remains slow.
Complex issues around inflation and the building regulatory framework (BSA), compounded by ongoing viability challenges, will continue to dominate the residential market in 2025. New government initiatives such as the ‘grey belt’ classification may start to unlock opportunities, but it looks unlikely that they will make a significant impact on delivery in 2025.
While 2024 may not have been as bleak as some imagined, there is more optimism among the industry as we enter 2025. I foresee growth in large scale inner-city mixed-use regeneration that is phased, allowing investors to take a longer view in terms of market predictions.
Oliver Meyers
Co-founder, RE-DEFINED
Managed office space is earmarked for strong growth, focused on a strategic, portfolio-scale solutions. This blends both flex and traditional, so that landlords can offer hybrid solutions directly to clients and at the same time enhance their own assets, offer and brand.
Landlords are mandating flex operating partners to provide a suite of services that meet the needs of occupiers whether those needs be for private office suites, hot desk areas, coffee bars, business lounges, creative spaces, recording studios, events or conference spaces. This allows offices to be operated with more of a B2C mindset, utilising a highly curated service layer that enables the often vaunted ‘flight to quality’ for both investors and occupiers. This means that landlords can directly deliver defined building experiences and ultimately improve the overall way that buildings are both experienced and operated.
Thomas Vandecasteele
Managing director, Legendre UK
Housing-wise, Labour’s ambitious agenda to ‘get Britain building’ is keenly supported by the industry. But to effect real change, we need to assess the viability of bringing schemes to site, especially given increasing construction costs.
Emerging markets such as co-living continue to provide strong investment opportunities across the UK, with the potential to meet the housing needs of communities nationwide. However, investors and developers will need to remain mindful of the evolving regulatory frameworks across the regions and potential challenges of market saturation.
Recent government announcements promise support for small housebuilders and the build-to-rent sector, and we are hopeful that the revised NPPF and changes to local plans can build momentum for housing delivery and economic growth targets, thereby instilling confidence in investors.
Lloyd Lee
Co-founder & managing partner, Yoo Capital
After a year of double-digit inflation and geopolitical instability, 2024 reinforced the importance of projects with deeply embedded social and economic value, and I am optimistic that lenders will increasingly favour projects with sustainable returns and societal impact. Culture is not just an intrinsic good, it’s a financial multiplier, driving tourism, improving placemaking and enhancing property values, and Yoo Capital’s work transforming Olympia exemplifies this. When we open in Q4 2025, Olympia will be a new home for global culture, entertainment and innovation. Positioning culture at its core has ensured community resonance and attracted long-term, value-driven investment.
Olympia stands as a testament to the fact that that overseas investors are willing to commit – when the returns are right. We have attracted serious capital to London with forecast valuations up to £3bn once fully operational. Enormous opportunity exists for other high-value projects like ours and I hope to see more follow suit.
Rebecca Campbell
Chair of the Property Litigation Association and partner at BCLP
There is major law reform on the horizon in 2025, with the Renters’ Rights Bill moving quickly through Parliament. While the Property Litigation Association (PLA) hopes the legislation provides the intended greater protections for tenants opposite rogue landlords, it is almost certainly going to lead to increased litigation within the residential sector and could put a strain on an already overstretched county court system. The increased uncertainty and delays that landlords will face in obtaining possession of their residential properties could result in many landlords deciding to exiting the rental market altogether.
The 1954 Act consultation published last year has also posed existential questions as to whether business tenants still need security of tenure. The PLA will be preparing a response to the consultation on behalf of its members and will be ensuring members’ views and experiences with the Act are reflected in that response.
Simon Ryan
Developments director, Ballymore
It feels like we’re on the cusp of a bold new era for housebuilding. Our new government seems to be leading the country back to a space where the homebuilding industry is appreciated as an important investment market for the UK that can support ambitions for economic growth. The new version of the National Planning Policy Framework is a welcome signal of intent. Any moves that seek to simplify (and hopefully depoliticise) our overly complicated planning system – one of the biggest blockers in delivery – are welcome.
The Gateway Two process with the Building Safety Regulator is creating a cliff edge for housing delivery. If the same issues are experienced in Gateway Three, the sign-off prior to occupation, this will be catastrophic for many developers and will cause untold financial difficulties for the entire construction industry. I welcome the planning reforms being introduced by the new government. However, the Gateway processes are having devastating effects on the delivery of the 1.5 million new homes in the UK.
David Carter
Chairman, Sandyford Properties
The impacts of November’s Budget and the economic plans of the new US presidency will be fully felt across the market this year. We are already expecting to see slowing interest rates cuts – with these cuts predicted to bottom out at a level some 25-50 basis points higher than the markets are suggesting.
We’re also expecting to see the residential market digest the implications of the Labour government’s new planning guidance throughout 2025. The reality will be that any real net supply increase of new homes is at least a year away. Whether there are the building resources to meet the ambitious new housing targets remains to be seen. The £70bn of new spending will bode well for most assets, but tertiary or poorly located assets will do badly and may ultimately become candidates for brownfield residential redevelopment.
The levels of new residential development will also have the knock-on effect of increased industrial demand, as new industrial supply will be more limited while competing with supercharged development in the residential sector.
Will Amies
Managing partner, Feldberg Capital
The investment market should improve in 2025, as uncertainty around the impact that Trump policies may have on inflation and interest rates diminishes and a clearer picture emerges. Fears of an all-out trade war will hopefully prove unfounded. Cautiously optimistic investors will gravitate towards either big-name mega funds or high-conviction thematic funds with specialist managers. ESG will be the theme to watch in workplaces, logistics and life sciences, where a sector ‘green rental premium’ can be achieved.
In the office sector, value will be unearthed with brown-to-green strategies, especially in Central London amenity-rich locations, where there is an undersupply of quality workspace and poor quality but well-located assets are trading at attractive prices.
Logistics land values have also come down at a time when there is rising occupier demand driven by e-commerce and on-shoring, creating opportunities for developers. Secure long-term returns will be available for investors able to take advantage, and we have formed a JV with Henry Boot Developments to exploit these in 2025 and beyond.
Dr Peggie Rothe
Chief insights and research officer, Leesman
The upcoming year will see organisations decide on the extent of their return-to-office mandates. While focus should be on providing an exceptional experience both at home and in the office, companies are likely to adopt blanket policies or guidelines to support the return to the office, with three days per week as the prevailing norm.
With more standardised in-office attendance, I expect organisations to reassess their needs, driving further reductions in real estate footprints. Workplace quality will play a crucial role in decisions about which spaces to retain or move to. The shift from assigned to unassigned seating will continue, offering opportunities to enhance employee experience, if executed thoughtfully. My hope is that a long-overlooked necessity – training leaders to manage hybrid teams effectively – will gain traction.
The average home still outperforms the average office, setting high expectations for workplace quality. However, at Leesman we’re seeing that this gap is narrowing as organisations invest in diverse spaces tailored to employees’ specific needs. This investment focuses on providing areas that foster collaboration, knowledge sharing and social connection, while also ensuring the workplace supports individual productivity through more private and quiet areas.
Mikael Lundman
CEO, Proptivity
A lack of robust indoor mobile infrastructure could become a major stumbling block for property owners looking to attract and retain tenants in 2025. Most occupiers (89%) now expect great indoor mobile connectivity when choosing a new office, while 64% are willing to pay higher rent for offices with better indoor mobile connectivity. That can’t be overlooked. Comprehensive mobile coverage inside commercial buildings is no longer a convenience. If owners want to keep tenants happy, achieve premium rents and increase asset value in the year ahead, it is essential.
With hybrid working the new norm, we will also see an increasing focus on digital security. The rise of nomadic employees and visiting collaborators has exposed a critical vulnerability in workplace connectivity. Many employees are forced to rely on public or guest wi-fi networks with weak security protocols, making them vulnerable to ‘man-in-the-middle’ cyber attacks. More consideration will be given to ensuring commercial buildings use secure, high-quality mobile coverage to mitigate the huge risk of data protection issues.
Ultimately, robust indoor 5G will underpin secure, versatile, sought-after workplaces in 2025. Owners investing in future-proof mobile infrastructure will meet growing demand for secure, uninterrupted connectivity, propelling tenant satisfaction, safeguarding data, and unlocking productivity and value.
Tarry Depledge
Head of ESG, Moda Group
Social value reporting will play a vital part in the future of ESG, with businesses needing to show a full view of their impact on society. This transparency will be key to further building trust and credibility with stakeholders, one of the many reasons that Moda made social value a key focus area in 2024. By building a strong platform to credibly measure and report from, we will continue to push forward on this front through 2025 and beyond.
I think this year AI and ESG will be talked about a lot; as the technology advances in the space, it will provide stronger and more transparent ESG assessments, which are critical for investors, companies and sustainable development of the future. With increased regulation around ESG, AI will assist regulatory bodies with the monitoring of environmental and social requirements, resulting in a further heightened need for accurate and transparent ESG reporting.
Seb Dooley
Senior fund manager, Principal Asset Management
We envisage data centres remaining the sector with the brightest outlook, owing to favourable structural trends and a widening supply-demand imbalance.
In the five most important European markets – Frankfurt, London, Amsterdam, Paris, and Dublin – supply growth is limited by challenges in sourcing power connections and land with the required permissions. Moreover, demand from occupiers has increased to a new high due to continued cloud adoption and the increased integration of generative-AI processes into corporate IT infrastructure. This, in turn, is leading to strong rental growth for hyperscaler facilities.
The additional demand is not limited there, though. Corporates are increasingly moving their IT infrastructure plans forward to ensure they are able to find efficiencies through generative-AI. This is significantly benefiting the retail colocation market and leading to a diversified set of interesting opportunities to deploy capital.
Andrew Gallacher
Senior director EMEA, Soben
I’m optimistic about the opportunities ahead. Planning reforms could boost the residential sector to meet ambitious housing targets, while a focused March spending review could drive investment across infrastructure, health, defence, and education, setting a 10-year roadmap for growth. I also hope the UK government stays committed to its net-zero targets, delivering a fully funded clean energy plan that drives construction growth and secures our sustainable future.
However, challenges remain. The change in the US administration could unsettle the global economy, and escalating conflicts in Ukraine, Russia and the Middle East continue to strain material costs and supply chains, driving up construction costs.
The growth of the UK data centre sector is particularly exciting, especially for Scotland – Soben’s home. With abundant natural resources and a bold clean energy strategy, Scotland is uniquely positioned to develop sustainable, world-class data centre facilities – an opportunity we must seize.
Tim Hardwicke
Partner & head of agency, SHW
Take-up in the industrial and logistics market across the South East was down significantly in 2024, which was to be expected in a year that saw a new government and a radical budget announcement. However, with a clearer future, interest rates stabilising, investor appetite and with a large number of lease events due across 2025, we expect transactions to increase dramatically this year, bringing them back up to average levels.
A good indicator for the year ahead lies with Panattoni’s confidence in speculative industrial/logistics development across areas such as Burgess Hill, Brighton, Crawley. With two lettings just completed in Burgess Hill and good interest in the Brighton scheme, Panattoni has now purchased another site on the Sussex coast for further speculative development, showing that demand for new, quality, sustainable stock is very much alive.
Others also have confidence in the South East such as Goya Developments and Dunmore in Billingshurst, GLI in Croydon and Prologis in Beddington. The one factor we can’t control is the impact of wider global issues such as the ongoing conflicts in Ukraine and the Middle East.
Kate Scholes
Head of business operations, Rapleys
2025 will see a greater focus on people and operational costs thanks to the budget changes to national insurance contributions, living wage rises and other rising costs. Some property firms may be looking at how to use AI and data to fulfil staff roles more efficiently. Others may look to move staff into different teams temporarily alongside job cuts. However, we believe that those who place value in the retention and attraction of talent, ongoing recruitment of best in-class experts, as well as the productivity, wellbeing and attraction of workplaces and investment in data and technology will win because ultimately it’s how these things work together that determine success.
People will never be replaced, but they can be better supported by their surroundings and tools. That’s what Rapleys will be focusing on – alongside ongoing growth in the right places for our clients – so that we can adapt quickly to this fast-paced changing market and meet the ongoing and growing need for unique property insight.
Russell Smith
Founder & managing director, Ecofurb
In 2025, I hope to see more homeowners prioritising retrofit as a much-needed solution towards achieving net zero. Energy-efficient homes are set to become the new must-have in the UK property market if we are to future-proof homes against rising energy bills and changing climate conditions.
The government will release its Warm Homes Plan in the spring, setting out key measures for improving energy efficiency in housing. While grants are expected to be on offer, these won’t be available to everyone. However, more lenders are introducing green finance incentives, such as larger mortgages for homes with a higher EPC rating and interest-free loans for making homes energy-efficient.
These steps will help more homeowners understand the importance of retrofit. I expect to see an overall drive in homeowners taking action, seeking out plans with providers like ourselves, and making home upgrades to make them energy-efficient, sustainable and resilient for the future.
Andy Hulme
Chief executive, Hyde Group
With the general election last year, we saw a big shift with the new government saying it is committed to tackling the housing crisis, which is very welcome. We have seen promising early signs of the government’s intentions with the proposals for planning reform, the target to build 1.5 million new homes and housing generally being a key part of the government’s agenda. 2025 needs to be the year of delivery.
To tackle the housing crisis, we need to see more funding for new social and affordable homes and a more ambitious long-term settlement for social rents. These measures will give providers confidence to invest in improving existing homes, as well as enabling us to attract more private sector investment into the development of new affordable homes. Given the scale of the housing crisis, people across the country need to see real progress this year.
Oliver Moore
Senior associate, Design Engine Architects
The challenges of 2024 continue into 2025. As we unlock the potential of urban brownfield sites with our clients, the difficulty lies in ensuring that new development actively contributes to and enhances the nature of the existing city surroundings while also achieving density and viability. Despite the hurdles involved, each and every project represents an opportunity to learn and innovate, and to establish new ways of working with local authorities to ensure delivery of a high quality design outcome.
In Winchester, we are working with the city council on the Station Approach regeneration area. Located outside the historic city centre, the site offers an opportunity to improve the public experience of the arrival into the city. We are developing a concept masterplan (a newly adopted step in the local planning process) that prescribes strategic urban design principles including quantum of development, scale and nature. The process de-risks the site by seeking the support of the planning authority and the community through consultation. It also has the benefit of presenting the vision for the site in a way that can attract developers to commit investment into the city.
George Beard
COO, Meeting Place
2025 will be the year when community support for new homes and infrastructure awakens at a grass roots level. Through innovative engagement techniques, greater numbers will become more attuned to the housing crisis and its role in restricting the potential for progress up and down the country.
On a more sombre note, bold ambitions set out by the Labour government to build 1.5 million new homes by the end of this Parliament just won’t stack up, whether that’s because of poor labour supply, lack of materials and inadequate resource to process applications at a local authority level, or with the Planning Inspectorate in dealing with appeal cases. More investment will be needed in these areas. By the end of the year, the English Devolution Bill will have received Royal Assent, triggering local government reorganisation and a flurry of new combined authorities, paving the way for a return to spatial planning.
Rachel Bell
Board director, Stride Treglown
We’re feeling cautiously optimistic for 2025, with our pipeline in technology and innovation and retrofit work across all sectors looking healthy alongside our more traditional public sector markets. I feel as though 2025 could be a ‘year of the future’ where we can start exploring what lies further ahead and how the industry could respond. The opportunities presented by AI need to be properly considered and conversations that are starting around developments such as data centres in space need to be given due attention.
More immediately, I’m encouraged by how the sustainability agenda is evolving to encompass regenerative design, biodiversity and social value as well as carbon reduction. I hope that we see a resilient pipeline of work that enables us to build homes and regenerate towns and cities in a way that will benefit everyone – and the planet.
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