Green shoots of recovery expected by the end of 2023 for U.K. real estate

Real estate investment markets are expected to emerge from a period of uncertainty, and pricing will likely stabilize toward the end of 2023, with a continued flight to quality and ESG being key drivers of activity across all asset classes, according to the UK Real Estate Market Outlook 2023 published by CBRE.

In the near term, a moderate recession is expected, with high inflation and rising interest rates putting downward pressure on economic activity. Income returns, rather than capital growth, will likely drive commercial real estate returns in 2023 – heightening the importance of asset management and the financial performance of occupiers.

On the investment side, Jennet Siebrits, CBRE’s head of U.K. research, anticipates further inbound investment into the U.K. market: “While we forecast investment volumes will drop somewhat, the U.K. real estate market benefits from a diverse investor base. The realignment of prices towards the end of 2022 means tha