The prediction comes as “a growing economy and a strengthening of the labour market will provide a positive backdrop for real estate in 2022” CBRE said after publishing its annual UK Real Estate Outlook review and added total returns for all UK property forecast is expected to be in excess of 6%.
Confidence is growing
On the hospitality sector, the report stated operators across the sub-markets are at various stages of recovery and confidence is growing. It added there is “a wall of capital” targeting the sector with surplus of demand over supply for operational platforms and the “visibility of the recovery and understanding of future performance will continue to be key predictors of investment appetite and pricing in each sub sector”.
CBRE also said investors who are able to assess recovery ahead of the curve have the opportunity to benefit from both trading upside and pricing improvements.
The property agent anticipates record M&A activity across operational real estate sectors, particularly across leisure and pubs “as most sectors have positively emerged from the pandemic”. Additionally, it said there has been an increase in investors with strong capital reserves seeking to take direct operational risk within the leisure market.
CBRE head of research Jen Siebrits said: “While the challenges of the past year are not quite yet behind us, with the Omicron variant of Covid presenting new uncertainties, the property industry can still go into 2022 with a renewed sense of optimism. Buoyed by a growing economy, real estate has real impetus for growth in 2022. The current spectre of inflation will subside, proving to be transitory rather than long lasting, with only modest rises in interest rates necessary.”
CBRE also sees sustainability in terms of real estate as “taking centre stage this year” meaning demands for rigorous valuation of sustainability features will grow during 2022 as investors seek to identify buildings that merit a ‘green premium’ and avoid those that suffer from a ‘brown discount’ as Governments and businesses target progress towards ‘net zero’ emissions targets.