It’s safe to say that 2023 was a year of 2 halves. H1 proved to be more challenging with the multitude of Geopolitical events, from the continued challenges around commodity and energy prices to inflation and rising interest rates placing downward pressure on growth. These conditions meant challenging times for property with lower investment, higher debt, and barriers around deploying equity and debt capital.
As the year progressed investors started to adapt, inflation and interest rates came down and progressive growth was made across various sectors with the residential BTR industry being a notable positive.
Housebuilders continue to have a tough journey ahead with the CPA (Construction Products Association) forecasting private home starts dropped by 25% to 123,000 in 2023 with a marginal improvement forecast in 2024 and 2025, albeit to levels way below 2022. Completions dropped 19% with this year expected to remain flat at 134,000. There is hope, that new legislation around planning reforms, increased bank lending and conversations regarding green belt development should stimulate activity in this challenging market.
The FM market continued to outperform against the global downturn in activity. Private equity has increased its foothold in the sector by increasing the year-on-year deal activity from 42% to 47% this surpasses the 5-year average of 42% and the 10-year average of 31%. This is mainly due to the cost of debt, lender appetite, and due diligence along with a slump in profitability due to the increased interest rates. The public sector continues to be a driving force within private acquisitions due to the increased demand for fire safety and decarbonisation. Hard services FM dominated the deal market and we expect the same in 2024.
As the new year progresses the market continues to evolve with a larger emphasis on the likes of sustainability and ESG reporting, AI Integration, DEI, and flexible work options. As expert consultants within the field, we’re often asked by our customers what the driving factors are to attract new talent, coupled with what they seek in future employees.
The answers come in 2 stages; What are candidates looking for and what do businesses require in 2024.
In relation to candidates, the message remains clear that there is still a lack of confidence in the market and now more than ever they seek a compelling narrative to make a move. Companies that offer a clear path for growth opportunities, showcasing flexibility to working models along with company culture remain the target audience. Typically candidates are pressing for a 10-15% increase in remuneration along with competitive benefits.
From a client perspective, there is absolute understanding of the skill shortage that remains however the expectations in experience and diverse skillsets remain a key focus. With the evolving world of Property & Real Estate, clients are prioritising candidates who possess skill sets in the fields of sustainability initiatives, skills in technology and data, individuals who seek to develop and learn and stay current with industry trends and standards. Clients are also continuing to strive towards a more inclusive and diverse workforce, actively recruiting people from different backgrounds, genders and ethnicities. With unconscious bias training, diverse candidate attracting strategies and inclusive recruitment practices gaining momentum.
As always we strive for excellence in service to our customers, if you operate within the Property & Real Estate market please reach out to myself or the wider team and we’d be happy to help.
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