With climbing inflation, increasing interest rates and turbulence throughout the financial markets, what does this mean for real estate investors and growth within the sector? Deloitte hosted CREW UK's first 2023 event providing attendees with the following insights:
- economic drivers in 2023
- challenges for next year and beyond
- market disruptors and the influence on real estate and business overall
Tom Simmons, Senior Economist | Deloitte LLP, led this in-depth discussion and Lauren Rew, FA - Real Assets Advisory | Deloitte LLP, provided an overview of key indicators within commerical real estate and highlights per Deloitte's
2022 Winter Crane Report.
“We expect the UK economy to contract this year as elevated inflation squeezes demand and the impact of higher interest rates further weighs on activity. Markets are pricing further interest rate hikes by the Bank of England, with current positioning indicating the base rate will peak at just below 4.5% in the summer. The good news is that inflation, though still close to multi-decade highs, is likely to have peaked, and we think it will fall to less than half its current level by the end of 2023.” – Tom
“While volatile construction costs are tricky to manage, repositioning assets to take advantage of changing occupier requirements is still a hugely attractive strategy and it is actually a very exciting market for active management players who see this as a time of opportunity. Occupiers are focusing on Grade A, high quality buildings in good locations with strong ESG credentials that support the brand image of the occupier. We believe repositioning assets to take advantage of this demand will be a major driver in the months and years ahead.” – Lauren
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The Monday Briefing (deloitte.co.uk).