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Real Estate Legal Outlook 2023
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.
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.
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.
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.
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.
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.
“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.