_Valuation & Advisory seminar – key themes for 2025

Our Research team opened the session with an overview of the macro-economic and geopolitical factors impacting on the market, followed by sector specific updates from our valuation and agency experts, and closing with an informative panel Q&A. Some of the highlights from the morning include:

Sectors likely to perform best in 2025

• Retail is expected to perform strongly, with some outperformance in certain areas, especially retail warehouses and prime shopping centres. Performance likely to be driven by rental growth.
• Offices will see continued rental growth for best-in-class stock, in both central London and key regional cities, with some yield hardening possible in London.  Secondary, capex intensive assets may continue to struggle.
• Industrial and logistics will continue to outperform, although the rate of rental growth is expected to slow.
• Specialist sectors such as data centres and hotels will see strong demand, though investment in data centres requires significant capital.

Inflation and impact on interest rates

• The Bank of England faces continued challenges with inflation, despite some factors being well known and expected (e.g., NICs rises, energy price increases, possible US tariffs).
• There is concern about global spending and the uncertainty caused by geopolitical factors.
• Reductions in interest rates are still expected, but there may be fewer than previously expected.

Lending landscape in 2025

• Lending in 2025 is expected to remain similar to 2024, with no dominant lender type.
• There will be pockets of activity from debt funds, clearing banks, and IBBs (Investment Banks).
• The lending landscape will remain cautious, with focus on the specific product and available stock. We may see some tightening of margins or other deal terms for prime assets.

Future of ESG in 2025

• ESG is expected to remain crucial in 2025.
• ESG continues to drive value for institutional clients, and progress towards meeting 2030 climate goals will be a key focus.

Possible sellers in 2025

• Some sellers will come from defined benefit pension funds, with profit-taking from investors who bought during the COVID period (2020-2021).
• There is unlikely to be much distress selling in the market, but there may be more profit-taking.

Uncertainty and geopolitics

• Political uncertainties, such as global conflicts and elections, create challenges in forecasting economic outcomes, making interest rate predictions difficult.

Our Knight Frank Valuation & Advisory experts provide a comprehensive range of single and portfolio valuations, market appraisals and consultancy services across both commercial and residential sectors. Get in touch to find out more and to book your place at future events.