UK Economic and Real Estate Briefing – February 2024

This year will be pivotal for UK real estate. The backdrop remains challenging, but interest rate cuts are on the horizon, business confidence is improving, and lower inflation will support real income growth.

• While recent indicators are encouraging, we expect growth to remain flat at the start of 2024, before gradually improving in the second half of the year.
• While holding Bank Rate at 5.25% at the latest meeting, the Bank of England’s messaging suggests to us that cuts are on the horizon. We continue to expect 100 bps of cuts this year.
• UK CRE investment volume fell over 40% y/y in 2023, but with interest rates now normalised, the outlook appears to be favourable for the first time in over two years.
• The 5y swap rate is now holding below 4%, with the trend pointing downwards. This is an important line in the sand for those waiting for debt to become accretive to returns.

Download the full report below.