By Marc Gilbard, Co-CEO and Executive Chairman, Moorfield Group
2023 commentary and 2024 outlook
While 2023 marked another tumultuous year, with geopolitical risk rearing its ugly head once again in the form of the Israel-Hamas conflict, certain events this year also reminded us of why we remain quietly optimistic about the outlook for the UK in the years ahead.
After the chaos of the Boris Johnson and Liz Truss premierships, the current Prime Minister, Rishi Sunak, is helping re-establish the UK’s reputation as a safe haven for global capital. While this current government is far from perfect, there is a clear sense that PM Sunak takes the duties of his office seriously. Nonetheless, this time next year will see the UK having recently had, or about to have, a General Election – and very few political analysts consider it likely that the Conservatives will be returned to power for a fifth consecutive term. This begs the question of what the current leader of the Opposition Party (Labour) and his top team will introduce and amend when in ‘Office’. In our opinion, this Labour Party is much more like the party of the Blair years rather than the unsettling encounter with J. Corbyn. Sir Keir Starmer, has been the Leader of the Labour Party since 2020 and a Member of Parliament since 2015. He was previously a barrister and Director of Public Prosecutions from 2008 to 2013. It would appear to date that his moral compass works! Time will tell.
Also of relevance, has been the meaningful revision to UK GDP data over the year. The narrative of Britain being a laggard relative to peer economies has been overturned, with UK outperforming the European Union and also the European ‘powerhouses’ of both Germany and France. This uprated growth story reflects some of what we have been seeing on the ground. The ‘no hope, no growth’ tale for the UK always felt overly negative to us and that is why we have remained selectively active across all our strategies, and we expect to continue with this approach in 2024.
2024 will likely prove an interesting (and hopefully fruitful) year for new investments by MREFV and MREIT. Whilst interest rates appear to have stabilised, and the market expectation is now for near future reductions, their recent rapid rise and the resultant impact on valuations and debt affordability will not have fully fed through the system yet, and financing and refinancing stress/distress will give moments of opportunity for value-add managers like us.
Perhaps most importantly for our investment partners is the fact that the sectors in which we are active (Living and Storage) are supported by structural undersupply and unfulfilled occupier needs that will outlast any individual economic cycle. The watch word in real estate today is ‘resilience’ and that is something all our chosen asset classes have demonstrated.
Top 10 – what to look out for in 2024 in UK real estate opportunity/disruption (+/-):
We have recently been nominated as UK fund manager of the year – please vote for us here if you feel so inclined: