AI to move from a tactical tool to a strategic priority for real estate industry – find out more with Search Acumen
- Optimism around growth to strengthen, but cost cautiousness will remain
- AI to take on a more significant strategic role and disrupt traditional business models
- Consolidation in the PropTech supplier market continues to improve product quality
Growth optimism returns, but cost cautiousness remains
With a new government committed to getting Britain building and the macro-economic situation far more favourable than a year ago, 2025 will see renewed optimism and a pick-up in deal flow. However, this is far from a return to a bull market as investors’ experience of a challenging few years since the pandemic will not be easily washed away. While the economic picture is improved, confidence is still brittle. Inflation has settled but has crept up again towards the end of 2024, and opinions remain split on how the direction set out by the Government in its first budget will impact decision-making. One effect of these concerns will be that investors will be more ambitious next year, but laser-focussed on margin and, as such, looking at ways to minimise costs from design, to construction and legal and professional services.
Andrew Lloyd, Managing Director at Search Acumen, said: “Our conversations with real estate professionals and property lawyers suggest confidence is growing and I think we’ll likely see improved deal flow through 2025, even just from having a more stable government, with a clear commitment to getting Britain building. That being said, while confidence is improving it is still very fragile and I don’t think we’ll see huge breakthroughs in 2025.
“At last, we’re on a pathway towards growth in commercial real estate. But, the hangover from the last few years of challenging economic conditions will be long-lasting with the market moving forward incrementally, and likely with setbacks to come along the way. In that context, budgets will remain tight, scrutiny around supplier costs will be intense, and deals will only progress after very robust viability assessments. This will be even more true for sectors that are already characterised by challenging margins, like social housing, where we’ll surely see more activity given the Government’s proactive housing agenda, but profitability is harder to come by because of the dynamics around asset pricing and the complexity of these deals to put together.”
Read full article here https://www.search-acumen.co.uk/news/ai-to-move-from-a-tactical-tool-to-a-strategic-priority-for-real-estate-industry/
