Next year house prices and rents will rise, there will be more of an emphasis on sustainable developments, while there will be more interest in offices you can rent flexibly.
That is according to a range of predictions made by real estate management company Colliers, which have been summarised by PropertyWire.
- Colliers reckons interest rates will be as low as 3.75% by the end of 2025, compared to 4.75% now, which should drive more property transactions. However, cost of living challenges will limit demand.
- House prices should continue to rise steadily alongside demand, increasing by between 3-4% in 2025. They look set to reach 3% in 2024.
- Rents are set to continue increasing in the private sector, driven by limited stock, smaller landlords leaving the market, increased taxes, and tenant protection reforms.
- For investors putting money into commercial real estate, returns are expected to reach 11% in 2025, partly driven by a strong drive for sustainable and flexible properties.
- Labour’s move to increase business rates for larger properties with rateable values over £500,000 will make it harder for businesses operating flagship stores and large high-street units to be profitable, putting a lid on demand for such premises.
- In the office market demand for flexible leasing solutions and ESG-compliant spaces will rise, while demand-for industrial and logistics spaces should match pre-covid averages.
- Competition is rising for prime space in the retail sector in shopping centres, high streets and out-of-town locations.
- Refurbishment of ageing student housing and Build-to-Rent properties is expected to surge, driven by the ongoing demand for high-quality rental accommodation in core cities.
- Hotels will benefit from growing demand, despite currently struggling with limited development activity due to high costs and constrained debt availability.
Dr Walter Boettcher, head of research & economics at Colliers, said: “The challenges of recent years have laid the groundwork for a reimagined industry – one where creative investment strategies, bold occupier decisions, and the ability to adapt to evolving demands will set the pace.
“As we look ahead, collaboration across sectors will be essential to unlocking value and creating sustainable growth for the future.”
