As you may have noticed, during the holiday break we’ve had the decorators in to update our print magazine’s look and feel. I hope you like the result, which is part of Property Week’s never-ending effort to improve the service we provide.
Over the past year, we have striven to deliver more in-depth analysis of the structural shifts going on in the sector, to help our readers make more sense of the day-to-day headlines. That’s a mission we will continue to focus on, day after day, week after week. As ever, I welcome your feedback, good or bad, as to how you think we’re doing.
Many other factors have held firm over the past year, not all of them positive.
Compiling our annual list of things to keep an eye on was no picnic this year – so much remains up in the air after a frustrating and confounding 2023 that we had to whittle down our watching brief report from a frankly unmanageable list of unresolved concerns.
Some of the questions we raise this time around have carried over entirely unchanged from January 2023.
Twelve months ago, we wondered when the nine members of the Bank of England’s Monetary Policy Committee might begin reducing rates, noting that the more optimistic commentators thought rates might head downwards in the second half of 2023. Today, the more upbeat prognosticators have shifted their gaze to the second half of 2024. Hopefully, this time they will be right.
Similarly, we wondered 12 months ago whether WeWork might sink beneath its debt burden and whether CO-RE and Mitsubishi Estate would be able to proceed with their redevelopment of the former ITV Studios on London’s South Bank. Both topics remain anyone’s guess – the latter a lingering matter for secretary of state Michael Gove to decide when he gets around to it.
Alas, for most businesses, deferring decisions is not an option. As our financial analysis draws out, many property owners this year will be forced to refinance this year as existing debt arrangements come to an end.
Falling valuations have already hit some borrowers by imperilling loan-to-value covenants. Anyone in this sticky situation will not find it improved when their loan matures.
New debt arrangements are bound to be on worse terms, where new finance can be found at all by the highly leveraged. Refinancing gaps will increasingly expose the stark difference between past and present. A surge in distressed sales seems inevitable, and some unlucky souls will find themselves still firmly in the red even after getting shot of assets.
As ever in business, what is bad for some will prove good for others. Firms with cash to invest will be best placed to prosper, of course, although firm nerves will still be required to do deals in today’s market.
Even in the midst of uncertainty, we can be clear about one thing: a state of indecision is seldom helpful to anyone in business. I expect 2024 to be characterised by bold bets, for better or worse, and a big uptick in deal activity.
We’ll see if I’m completely wrong soon enough.
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