Disclaimer: Views in this blog do not promote, and are not directly connected to any L&G product or service. Views are from a range of L&G investment professionals, may be specific to an author’s particular investment region or desk, and do not necessarily reflect the views of L&G. For investment professionals only.
08 Jan 2024
1 min read
UK real estate: Performance after repricing
By Bill Page
Could the UK be closer to the end of this process than other countries?
Bill Page, Head of Real Estate Research, considers in this note what may be next for British real estate after its recent bout of repricing.
He also examines the impact on near-term all-property performance of persistent upward pressure on yields, alongside the differing prospects for residentials, industrials and other sectors.
In summary:
- We remain cautious on near-term performance at the all-property level, given persistent upward pressure on yields, but some of this pressure has reduced as inflation has decelerated. UK real estate appears closer to the end of its re-pricing journey than in other geographies
- We expect potentially robust performance from residential sectors and believe this will support further institutional allocations. Parts of the industrial sector and other alternatives are attractive in our view
- Construction frictions are expected to limit supply risk and increase the scarcity value of premium product over the medium term. Frictions may also drive opportunities for institutional forward funding
- We believe real estate debt offers investors attractive return potential and can play an increasingly important role in overall real asset exposure
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