Savills forecasts rebound in commercial property

COMMERCIAL property prices are expected to bounce back next year as demand for green offices outstrips supply, according to Savills.

Mark Ridley, the company’s chief executive, said the property market would be “more challenging” this year than last, but should start to improve in 2024.

He said: “2024 should see more positive conditions for real estate market activity and Savills is investing in advance of such recovery.”

Savills, which works around the world, said the reopening of China and demand for more eco-friendly offices should boost property prices for commercial buildings.

Mr Ridley said: “We don’t have the same oversupply of development we had during the global financial crisis. Occupiers are prepared to commit to buildings and we have seen some rent increases as a result.

“There has been some hesitancy in leasing space, but people are willing to upgrade their offices to draw staff back to the workplace and to meet their sustainability targets.”

While the office market is strengthening in London, the United States has the slowest back to office rates of any region in the world, according to

Savills. The agency said workers in tech and finance were still reluctant to return to the office, especially on the West Coast.

Mr Ridley’s comments came as the agent reported a 16pc drop in profits last year. However, Savills noted that 2021 was an “abnormally profitable year” as lockdowns sharply reduced its spending on travel, events and entertainment.

‘People are willing to upgrade their offices to draw staff back to the workplace’

Continued zero-covid policies in China also weighed heavily on Savills and hit profits, Mr Ridley said.

He added: “Mainland China was inaccessible in 2022 and it only opened up to cross border activity last month. However, since it has opened up we have seen an uptick in business from Beijing and more cross-border flows into markets like Hong Kong.”

Savills said that the property market had gone through the fastest recalibration that it had witnessed in 30 years, with values whipsawing as a result of lockdowns and interest rate changes.