Property & Planning Outlook for 2024
Priorities over the next year for the UK in the Property and Planning industries are vast and, in many cases, ambitious, particularly when you throw the prospect of a general election into the mix. Hear from our team of specialists to find out how they see 2024 shaping up for housebuilding, the planning system, build to rent, real estate and PropTech to name but a few.
Perry Miller: “2024 will be another year in which notional housing targets are missed. A combination of under-resourced planning departments, a move to allow local councils to set local plans with fewer homes if they can show that meeting their target would damage the character of an existing area, and a year of elections at local, regional – and possibly national level – will create a perfect storm. At the same time, voices calling for change – particularly among the under 35s – will grow ever louder.
“The Conservatives’ position on new homes is largely understood, but Labour will come under pressure to explain exactly how it proposes to ‘bulldoze’ through its housebuilding plans. If the polls tighten, Sir Keir may be more careful with his language at the next party conference.”
Henry Columbine: “While we’re all fed up with hearing about the ‘flight to quality’ in the commercial property sector, the fact remains that we’ll continue to see high-quality office space performing well as businesses choose quality over quantity, and secondary workspace will remain harder to shift.
“We’ll see more creativity and innovation as investors look to turn obsolete stock into relevant and sustainable space. Hybrid working is here to stay, but I predict more people to be spending more time at the office by the end of 2024 as workers realise that, although they will fiercely protect the option to work from home, leaving the house and working with other people makes them feel healthier, happier and more productive.
“Higher construction and borrowing costs are likely to mean some financial distress – but also opportunities – as well as a slowdown in spades in the ground, as projects that were once feasible go back to the drawing board. This will affect supply and demand dynamics in future years, but 2024 will be a period of adjustment as individuals and businesses begin to accept that the very low interest-rate environment we enjoyed in recent years cannot last forever and change their approaches accordingly.
“After the disappointment of the withdrawal from the northern leg of HS2 and a feeling that levelling up was all talk and no action, it will be interesting to see what a potential new government might do for the regions. I expect to see more Build to Rent investment in Birmingham particularly, which still lacks supply compared to Manchester and London yet has one of the youngest populations in Europe. Reports suggest around 50 tenants are currently chasing each rental property, with rents set to rise and the city likely to become more popular with the delivery of HS2.”
Tom Carnegie on Real Estate: mixed signals but a chance to rebuild
“The majority of Real Estate funds will continue to trade at heavy discounts in 2024, driven by higher interest rates and weakened demand. A subdued market recovery may begin in the second half of the year, which will see more private investors looking to take advantage of lower valuations by entering the market or increasing their exposure.
"We are likely to see an increased focus on refinancing real estate loans, particularly those originating in different interest rate and market conditions. According to the Bayes Business School UK Commercial Real Estate Lending Report, the period between 2018 and 2021 witnessed over £175bn in debt origination against commercial real estate, making 2024 a critical year for many borrowers facing loan maturities.
"We will continue to see more PropTech companies enter the market, as the burgeoning sector looks to take advantage of new and developing AI technologies to streamline processes and create resilience in operations."
Looking to East Anglia, Phil Briscoe says: “The Eastern counties will continue to see high levels of interest from developers and housebuilders in 2024, as many move their focus out from London. In 2023, those developers saw their bottom line eroded by the triple impact of higher construction costs, higher borrowing costs and ever greater planning condition burdens. In the short term, this has resulted in some projects becoming undeliverable in their present form. For some, this will mean a redesign and planning resubmission in 2024.
"However, for many the simple economics are that market sale apartments work for prime London, and more of those looking at secondary locations will see their attention wander to opportunities in counties such as Essex, where good commuter links, good schools and an ambition for economic growth from initiatives such as the Thames Freeport mean this is a safer bet for single family home developments.
"As the economy stabilises, interest rates start to fall and the horizon of political change adds to a renewed sense of optimism, we can expect to see an uplift in land transactions and promotions in Essex (and beyond) in 2024.”
Click here to discover more about our Property & Planning expertise.