The common theme for the real estate investment market over 2023 has arguably been “uncertainty”. The last 12 months have seen a shifting general macro-economic backdrop, not least with material increases in interest rates (raising the cost of third-party finance) and significant geo-political events.

However, the real estate sector has also had to grapple with a number of industry specific drivers. The inflationary environment – and to a degree, supply chain issues – have impacted construction and development costs, and investors, managers and developers have had to navigate notable planning and regulatory developments (in particular in relation to ESG, planning and building safety). The acceleration of the pre-pandemic trend for more flexible working arrangements has continued to impact commercial real estate usage, core demand and leasing trends. This maelstrom has dampened transactional activity (although some sectors, such as logistics and data centres have fared comparatively well) as, in a market searching for equilibrium, sellers and purchasers have struggled to consistently find commercial alignment on pricing.

As we move into 2024, there are some positive signs on the horizon. As interest rates appear to be stabilising and inflation trends downwards, the market paralysis should alleviate and investment decisions can hopefully be taken with increased confidence, with market actors able to assess risk, raise finance and determine pricing with greater certainty. 

Within our Real Estate Outlook 2024, the Linklaters Real Estate team has been considering certain aspects of the legal terrain that may shape the year ahead. Please do not hesitate to reach out if you have any questions about the issues raised and/or any aspect of the market in general.

Best wishes for a successful 2024.

- Matthew Plaskow, Partner, Real Estate