RSM UK says real estate and construction businesses remain cautiously optimistic despite persistent economic and tax headwinds – a sentiment it believes could support a gradual recovery.
Its latest Real Estate 360 report, surveying more than 270 sector leaders, found that 64% feel optimistic about market prospects, broadly in line with last year’s 68%. Just 16% said they are pessimistic about the outlook.
Longer term, confidence strengthens. Over a third (36%) said they are “very optimistic” about the sector’s prospects over the next three years, up from 33% a year earlier.
However, barriers remain firmly in place.
Economic volatility was cited as the biggest obstacle to investment by 43% of respondents. Additional tax restrictions ranked second, highlighted by 39%, reflecting concerns about the cumulative impact of Stamp Duty changes, the Residential Property Developer Tax and further landlord tax increases.
CAUTIOUS OPTIMISM
Stacy Eden, partner and national head of real estate at RSM UK, says: “Our survey results point to cautious optimism – sentiment that could help tip the balance in favour of a gradual recovery throughout the year.
“But barriers to growth won’t help. UK growth forecasts over the next three years are mediocre, with concerns around potential future tax rises, and minimal productivity growth in the UK. Additional tax restrictions were the second biggest barrier for 39% of respondents. This has been driven by the continued high and growing rates of taxation that the real estate and construction industry must deal with.
“While the budget could have been more penal for the industry, the mansion tax and 2% rise on landlord tax has followed previous tax rises around Stamp Duty Land Tax and Residential Property Developer Tax.”
IMPROVED FUNDING
As interest rates ease, 19% say access to finance is becoming easier, up from 16% last year.
UK investors and family offices are now seen as the most readily available source of funding (34%), overtaking private equity (30%), with high street banks close behind at 33%.
Eden adds: “These figures highlight the attractiveness of real estate to UK investors and family offices, with total returns in excess of 7% per year.”
