New UK property market insights from Handelsbanken from Nicola Arrowsmith, Branch Manager of Handlesbanken, Chester

New UK property market insights from Handelsbanken from Nicola Arrowsmith, Branch Manager of Handlesbanken, Chester

As the Bank of England teases a rate cut this summer, the property sector is showing signs of life – after a prolonged period of high interest rates and other uncertainty.

Our 2024 Property Investor Report reflects a cautious optimism with more than 60% of investors across the UK telling us they’re planning to increase the size of their portfolio over next year. That’s slightly higher than our last poll, where just under 60% were planning to add to their holdings.

But one exciting piece of news is that the North West has overtaken both London and the South East – traditionally investor hot spots – in terms of desirability, auguring well for property professionals in Chester and the wider region.

Investor sentiment – what are they looking for?

The majority (70.5%) of those looking to increase aim to diversify portfolios both geographically and sectorally. But they seem to have fallen out of love with student housing/Houses of Multiple Occupation (HMOs). In 2023, 79% planned to increase exposure to student housing/HMOs, whereas this year, that had fallen to just 49.5%.

There’s been a slight increase in interest in healthcare property and fewer of our panel are looking to divest from this than last year. However, property type is far from the only variable.

EPCs and ESG

A huge majority of the panel reported that tenants are requesting sustainability features in their properties. These could include solar panels, EV charging facilities, or higher energy performance certificates (EPCs). Over 95% of investors said they have been asked for this feature, with landlords in the north-east of England most likely to say this. Evidence from our branch network supports this trend. Other insights from our branch teams are suggesting that whilst greener properties currently enjoy a market premium – often termed ‘greenium’ – we are now starting to see the possibility of less-energy efficient ones having to discount.

Other external factors are still affecting sentiment

Unsurprisingly, the majority named interest rates as having a significant impact on sentiment. Our economics team has been predicting the first rate cut is likely to come in late summer – probably August – and the most recent inflation figures from the Bank of England support this. Interestingly, one factor that did not seem to be having all that much effect was the possibility of a general election. With this confirmed for 4th July, it is heartening it seemed unlikely to have an impact!

At Handelsbanken, our nationwide branch teams have an in-depth understanding of their respective markets, enabling them to offer valuable insights into local dynamics, emerging trends, and potential opportunities. We take pride in being a trusted partner, leveraging our on-the-ground presence to deliver personalised advice that aligns with our customers’ unique goals.

Read more insights in the 2024 Handelsbanken Property Investor Report