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Real Estate Legal Outlook 2023

I confess, I am a fair-weather cyclist. Any ride that requires me to get wet or to go up and down the gears too frequently, will result in much grumbling and a hasty check of the map to see if there is a shortcut.

Much like my worst experiences on two wheels, 2022 has been a year in which the real estate industry has faced many changes of gear. Early on, it picked up pace as most economies enjoyed a release from strict Covid lock-downs, but thereafter found itself puffing hard uphill as inflation undermined appraisals and raised financing costs. As real estate funds sought to prove their ESG and green credentials, there was a noticeable push forward to upgrade space to operational net-zero, only for the challenges of embodied carbon and an energy crisis to result in the pedals being somewhat disconnected from the wheels. More recently, the industry raced ahead as it saw the potential regional benefits of new investment zones, only to slow down again as those policies lost momentum.

The real estate industry will continue to face challenges in 2023. Some of the old challenges will no doubt refuse to leave the stage (my guess is inflation is here to stay for a bit longer) and some new ones will join them and take centre stage (your guess is as good as mine on what those may be). Sometimes these challenges can seem insurmountable.

Whilst it is tempting to hope for a single shortcut to resolve the various challenges the industry faces, I am drawn to an idea which was put to glorious effect in the world of cycling. Sir Dave Brailsford, the former performance director of British Cycling, is well-known for his theory of marginal gains. Put simply, if you make a 1% improvement in a host of tiny things, the aggregate effect is not just significant but game-changing.

And in that light, small incremental improvements in how we all respond to these challenges can make a big difference. So whilst we might not find an overnight solution, we will be taking small steps in the right direction, whether that is in relation to our energy use, our construction methodology, our recycling efforts, our payment of suppliers, our charitable giving or whatever other steps we can control and make (just a bit) better.

In the following pages, the Linklaters Real Estate team has been considering the legal terrain that will shape the year ahead and what sort of journey we might find ourselves on. I hope that you find it thought-provoking and, more importantly, that it sparks an idea of what small thing you might change for the better in the new year.

Best wishes to you and your team/peloton for a successful 2023.

Andy Bruce Partner,
Global Head of Real Estate

December 2022

Key Topics

Which way is the wind blowing …what are the bellwethers telling us? 

Only the most optimistic soothsayer would be wholly encouraged by current market conditions. The challenges are various and potentially compounding. Real estate investment and debt markets may soon be battling a tempest’s swell. However, as always, opportunities remain for those able to read the tide.

Read more in our Real Estate Legal Outlook 2023

The future of offices…commuting and computing (without polluting)

The past year has witnessed the return to the office as the UK continues to embrace a new world of hybrid working. The challenges for employers are immense; whereas pre-pandemic high office occupancy was a given, companies are now having to actively promote the intangible benefits of face-to-face meetings and preservation of team cultures in an attempt to entice employees back to their desks.

Read more in our Real Estate Legal Outlook 2023

Steadying the ship: planning reform back on an even keel?

It has been a helter-skelter year for the UK’s planning system as successive governments have sought to ‘radically’ reform a system which they consider to be unfit for purpose to deliver the development that is required to support and underpin the UK’s economic growth. Nevertheless, the most recent promises announced by the Government to scale back the only recently announced investment zones and a re-commitment to devolve further powers to the Greater Manchester and West Midlands Combined Authorities (an idea first floated in the Levelling Up White Paper) seems to be somewhat of a return to a status quo.

Read more in our Real Estate Legal Outlook 2023

The Turn of the Screw: the latest on the Minimum Energy Efficiency Standards (“MEES”)

Amid rising interest rates, increased levels of debt and pressures to improve the occupier-experience to attract workers back to the office, it seems unfortunate timing that landlords will also be expected to do battle with tighter environmental regulations early in the new year.

The pandemic, political chaos and the economy may have temporarily diverted the real estate sector’s attention to more pressing matters, but for landlords with property portfolios the proposed amendments to the MEES and their impending deadlines are fast approaching. With some landlords in survival mode (prioritising rent collection, low costs and attracting tenants) it remains to be seen whether the Government might revisit the 1 April 2023 deadline, although no indication has been given that such a postponement is on the cards so far.

Read more in our Real Estate Legal Outlook 2023

Topping out with inflation: solving the problem of soaring construction costs

There is undoubtedly a cost of living crisis – but the rising prices which have created it are not just a feature of our home lives and are not limited to the UK. Inflation in the construction sector has meant that 2022 has been a difficult year and the outlook for 2023 looks to be little different. Energy price rises have caused significant stress within the system, as have difficulties with supply chains which have led both to cost increases and to delays in availability of goods and materials and consequently delays to project completion dates. 

Read more in our Real Estate Legal Outlook 2023

Larger than Life: the path ahead for life sciences in the UK

Unsurprisingly, the Covid-19 pandemic boosted investment in the biotech and life sciences industry and the real estate which houses it. This sector is now a go-to asset class for investors in search of assets capable of exponential growth in potential returns on investment.

Read more in our Real Estate Legal Outlook 2023

The move to the metaverse: finding a base in the new virtual space

“The metaverse” has been one of 2022’s hottest buzzwords, but how many of us actually know what it really means? Well, in short, the metaverse aims to become a mass interconnected network which extends our off-line reality to an online and immersive web 3.0, transporting users to a virtual world filled with various virtual “real estate” assets.

Read more in our Real Estate Legal Outlook 2023

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Real Estate Legal Outlook 2023


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