The UK real estate sector should start seeing green shoots of recovery by the end of 2023, according to CBRE’s UK Real Estate Market Outlook 2023.
The consultancy group predicts that towards the end of next year real estate markets will have emerged from a period of uncertainty and pricing will have stabilised, with a continued flight to quality and ESG being key drivers of activity across all asset classes.
CBRE anticipates a ‘moderate’ recession in the near term and income returns rather than capital growth will drive commercial real estate returns next year.
Jennet Siebrits, head of UK research at CBRE, said: “While we forecast investment volumes will drop somewhat, the UK real estate market benefits from a diverse investor base. The realignment of prices towards the end of 2022 means that 2023 may provide opportunities for private capital to enter the UK market.
“We face an undoubtably challenging start to 2023, but the clouds will begin to break later in the year. Logistics and purpose-built student accommodation sectors have robust rental growth prospects and life sciences, build-to-rent and healthcare sectors have strong fundamentals that remain attractive to investors.
“The performance of the listed sector in 2023 will also be of interest. In 2022, the share prices of UK REITs fell well before the change in the private property market. Investors will therefore be watching for signs in listed property prices that indicate improved confidence in UK real estate. Green shoots of recovery will materialise.”
