Property investors have been urged to take advantage of the start of the new property cycle in 2024.

Adam Challis, head of UK research and strategy at property consultancy JLL, gave his thoughts on the market ahead of the UK’s Real Estate Investment and Infrastructure Forum (UKREiiF) in May.

Challis called on investors to act now, despite the challenging economic conditions.

“Investor-landlords are deeply challenged by a capital stack under pressure,” he said. “Both investor and corporate clients are focussed on the Facilities Management (FM) cost base that has spiralled in recent years, alongside existential questions for inferior assets, which remain outstanding.

“Political uncertainty is heightened, with national, mayoral and local elections domestically complemented by US elections in November that have global ramifications. The UK is actively involved in two regions of active combat, both of which have no clear end game in sight.

“So there are reasons for caution in real estate. Yet reticence to act will not define 2024; in fact quite the opposite. This is the first year of the new property cycle.

“The best real estate decisions over this new property cycle will be made in the next 12 months. Failure to act will mean missing the market turn and the best of the value that is emerging.”

Challis discussed some of the characteristics that are set to define these decisions.

“Near term focus on refinancing will dominate,” he said. “However, look through the short-term to technology as an enabler of value and mitigator of costs. This is especially true for sustainable tech, where commitments to net zero pathways or other ESG goals are successfully transitioning through technology-led solutions into clear actionable next steps. In fact the nexus between the two, sustainable proptech, is the most likely technology that investors will buy in 2024, according to the most recent JLL Investor survey.

“The prize for creating the most sustainable spaces is outsized rental growth. Corporates are uncompromising on commitments and prime office rents are being pushed up in an era of rarity for new supply.

“For industrial and logistics space, the best buildings are very well supported, especially where landlords are working proactively with property managers to understand nuanced occupier needs. Prime shops are seeing rental growth and demand in the Living sectors, already strong, is now a battleground for the best of these features under one roof.””

Almost 12,000 domestic and international attendees will head to Leeds in May 2024 for a three-day UKREiiF event where UK cities and regions will highlight opportunities and ambitions across numerous sectors, including housing, advanced manufacturing, life sciences, technology, healthcare, energy, retail and high streets, infrastructure, leisure, hospitality and industrial.

Challis added that the event provided an ideal opportunity to discuss investment decisions.

He said: “If the best decisions to be made over the next 12 years will be rooted in the next 12 months, UKREiiF provides a chance to bring together practitioners in the built environment so that we can consider the practical next steps. 2024 is going to be a challenging year, but one that will also be defined by opportunity.”