Fieldfisher real estate: Reflections on 2023 and predictions for 2024 | Fieldfisher
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Fieldfisher real estate: Reflections on 2023 and predictions for 2024


United Kingdom

The past 12 months have been challenging for transactional activity but revealing in terms of strategic decision-making.

This year has been a tale of two economies in the UK property sector.

While the overriding public narrative has been one of unremitting doom and gloom, there are some reasons to be quietly optimistic.

Transactional activity has certainly been subdued, while rising costs and a tight labour market have continued to pose challenges for many in the industry and insolvency levels have been depressingly high.

Despite the absence of property 'mega-deals', we have seen a steady flow of smaller strategic transactions.

Construction activity has also continued steadily, and insolvencies have consolidated some areas of the market, hopefully making them more sustainable in the long term.

Below, we share a small sample of the deals that have characterised our real estate advisory activity this year, along with our top five trends for 2023 and predictions for 2024.

Five of our top deals in 2023

Acting for the City of London Corporation on the c.£1 billion relocation of Smithfield Market to a new venue in Barking & Dagenham.

Settling a £70 million+ property dispute for a UK aerospace client.

Advising Dominvs on a portfolio of major redevelopments in South East England

Advising Kennedy Wilson on the sale of development land at Brighton City Logistics Park.

Advising on a £73 million loan for a major purpose-built student accommodation (PBSA) scheme in Nottingham.


Our top five trends of 2023

  • Student accommodation remains resilient: Analysis by JLL indicated that the purpose built student accommodation (PBSA) market had its strongest quarter year-to-date in Q3 2023, accounting for more than half of UK living investment at £1.2 billion. This was 60% above the five-year average for the sector, and was reflected in our experience, with strong pipeline of large PBSA deals coming through in 2023. 
  • Smaller transactions: Commercial property transactions have generally been smaller on average in 2023 compared to the last five years, with acquirers opting for lower-cost strategic assets rather than going for large, high-value deals.
  • Asset managers focusing on existing stock: Many of our asset management clients have paused their rapacious buying activity in favour of looking at value-add activities on the properties they already own, driven principally by falling yields.
  • Urban regeneration: Moves to relocate existing or replace derelict industrial operations from prime city centre locations to new premises on the edges of cities has continued, to make way for luxury prime developments, notably in London, Bristol and Birmingham. Higher costs and weaker house price growth have not deterred developers from pursuing these opportunities, as the desirability of city centre living has rebounded strongly post-pandemic.
  • Insolvencies: Regrettably, 2023 looks set to be a record year for real estate and construction insolvencies. According to a report by insolvency practitioner Begbies Traynor released at the end the start of November, construction topped the list of UK sectors with the most companies facing "critical" financial pressure, with 5,919 construction companies on the brink of bankruptcy. Real estate and property services came third in the list at 4,994 firms facing acute difficulties. Together, construction and real estate firms accounted for almost 30% of all companies in critical financial distress.

Our five top predictions for 2024

  • Building Safety Act: Introduced in response to the Grenfell tragedy, the Building Safety Act 2022 – which came into force in April 2023 – requires new UK buildings to be built and maintained in a way that prioritises safety, and places responsibility for fixing safety issues in older buildings primarily on building owners rather than leaseholders. This presents fresh additional challenges for building owners, including longer residual liability tails for buildings.
  • Debt vs equity squeeze: Highly leveraged property scheme owners will continue to be squeezed this year, necessitating a rebalancing of equity vs debt, or distressed sales that will present opportunities for well-capitalised acquirers.
  • Biodiversity Net Gain (BNG): With new BNG legislation due to come into force in early 2024, developers, local authorities and land managers have been taking stock of new obligations to help deliver BNG of at least 10% as part of new developments. But with this additional compliance burden comes opportunities to increase land values, generate new sources of income and make progress towards mandatory Net Zero targets.
  • Business protection to rise: The spate of protest activity and other acts of trespass by different groups in 2023, coupled with some recent significant court decisions in favour of landlords, could prompt a rise in business protection activity in the form of pre-emptive injunctions in 2024 by site owners and contractors.
  • Return to work: Sustained low occupancy rates for UK office buildings could foretell a refinancing crunch in 2024. According to research by Savills, average office occupancy rates across eight major European cities including London were at 57% in Q3 2023, still well behind the pre-pandemic rate of 70%. While mid-week occupancy is edging closer to 'normal' levels, we expect occupancy issues to continue posing challenges for landlords in terms of demand for space and rent yields until the labour market loosens and employers regain the initiative over working practices.

Areas of Expertise

Real Estate