As we settle into a new year, we’re taking a look back at our 2023 deals and what we can expect over the next 12 months.
There’s no doubt that 2023 was a challenging year. Interest rates rose to 5.25% and the cost-of-living crisis continued to bite, as inflation gradually fell from double-digit levels in January to 4% by December.
Unsurprisingly, the economic challenges coupled with existing and new geopolitical events throughout the year impacted investor confidence, across all sectors and regions.
A few key observations:
As investors pared back, it’s no coincidence that 40% of our deals were Retail (excl. Supermarkets and Restaurants), a sector offering higher yields.
Interestingly, 42% of our deals were in Greater London, a traditionally low yield market, suggesting buyers actively sought value without compromising on risk.
This also explains why there appears to be a higher deal amount in the South West, owing to investors, who would typically invest in the South East (a traditionally high value region), instead opting for Greater London.
49% of deals done were On Market, our highest percentage ever, suggesting that with competition for on-market deals lacking, Prideview’s tried and tested buyers found favour amongst selling agents.
What’s in store for 2024?
Key predictions from our Investments Director, Mark Hoffman:
With many financial experts predicting that interest rates are set to fall in 2024, possibly to 3% by the end of the year, we think that there is every reason to feel confident about investing in commercial property in 2024.
The High Street remains buoyant with many new overseas retailers looking for representation in the UK. We should see investment start to increase in London, after a dip in 2023.
With employees exploring different models of working, demand for both regional and city centre offices continue to grow – albeit on more flexible leasing terms.
Yield and covenant remain key factors for investment in 2024. ‘Low risk’ investments such as convenience stores, vets’ practices, medical centres will still be the most sought-after, as investors seek to take advantage of motivated sellers.
A General Election this year may affect investor sentiment for a few months, but if there is a change of government, we’ll be looking out for any tax changes and how this could impact investments.
Read Mark’s views alongside leading industry figures in this BE News article HERE.
As a reminder, we have the below budget categories for which you can be registered to:
£500k – £1m
£1m – £3m
£3m – £10m