UK Real Estate Navigator Q1 2024

Investment Rating - The report indicates a cautious investment outlook for the UK commercial real estate market, with a focus on potential recovery in H2 2024 as monetary policy shifts [14][15][17]. Core Insights - The UK commercial real estate investment totaled £9.6 billion in Q1 2024, reflecting a -2% decrease from Q4 2023 and a -14% contraction compared to Q1 2023 [15][22]. - The Living Sectors emerged as the most invested sector in Q1 2024, with £2.0 billion, followed by Retail and Industrial sectors, each also at £2.0 billion [15][22]. - Cross-border investment into the UK showed signs of moderation, with £3.6 billion invested, down -27% from Q1 2023, although US investors increased their investment by +3% QoQ and 37% YoY to £2.9 billion [15][22]. Economic Update - The UK economy is projected to grow by 0.5% in 2024, with inflation expected to stabilize around 1.9% in 2024 and 1.8% in Q1 2025 [9][10]. - Global economic resilience is noted, with GDP growth expected to be around +3.2% in 2024, despite geopolitical tensions and inflationary pressures [6][9]. Capital Markets - The UK remains the second most invested market globally in Q1 2024, with London being the top location for cross-border capital [15][14]. - Investment volumes in the City & Southbank were the lowest since Q1 2002, totaling £0.3 billion, with prime yields stable at 5.25% [22][24]. - The Industrial sector is forecasted to record the highest capital and rental value growth in 2024 [17]. Office Market - Active demand for office space in the City & Southbank rose to 5.5 million sq ft, an 8.8% increase from the previous quarter [28]. - Prime rents in the City & Southbank remained stable, with significant rental growth in the City Core and Midtown at annual rates of 16.7% and 14.3% respectively [29][22]. - The West End experienced a 55.9% drop in take-up to 0.6 million sq ft, the lowest in almost three years, but with a strong near-term demand supported by 0.95 million sq ft of deals under offer [36][37]. Sector Performance - Hotels, Senior Housing & Care, and Living Sectors recorded increases in investment YoY in Q1 2024, with Hotels up by +221% and Senior Housing & Care by +137% [15][22]. - The report highlights a broad-based sectoral breakdown in take-up, with financial services leading at 25.6% of total lettings in Q1 [36][28].