Following yesterday’s Aviva Real Estate Thought Leadership Dinner, Martin’s Properties CEO, Richard Bourne, summarises and shares his thoughts.
“Words used last night at the AVIVA Real Estate thought leadership dinner to describe the current state of play in the property market – ‘Bifurcated’, ‘Divergent’, ‘Cautiously optimistic’, ‘Challenging’, ‘Changing’, ‘Stodgy’, ‘Optimistic’.
It was a really useful discussion with a wide variety of views from institutions, listed property companies, private property companies and family offices with many worthy points to note, including:
1. Last year’s green shoots now blooming
2. Fight for capital
3. Lack of stock – hard to deploy capital
4. Divergence between occupational (strong) and investment markets (challenging)
5. Divergence between prime (strong) and secondary (weak)
6. Interest rates forecast to hit 3.75% by the end of the year and 3.25% by H2 2026
7. Debt for development available at 300 – 400bps above Sonia
8. Gilt rates unlikely to reduce significantly – currently 4.6%. This is likely to mean yield compression unlikely
9. Performance now all about rental growth and positive, active asset management. Higher inflation positive for rental growth and real estate
10. UK in a better place than many other global markets
Those who are waiting for distress or the market to recover to the 2010-2020 era will be disappointed. This is the new norm – the market has corrected quickly and settled down so it’s time to wake up and make things happen with the current reality.
Real estate requires a long-term return outlook – muscle memory of the era of higher interest rates and higher inflation appears to have been lost. Some investors want short-term returns from yield compression and highly geared returns using cheap capital, which is not necessarily deliverable.
At Martin’s Properties, we are seeing rental growth in Chelsea residential (9%+) and Kings Road retail (7%+). We are also seeing positive returns from a strong portfolio with active asset management and development throughout. The business delivered 9.5% total property return for the year ending March 2025 and a 7.9% pre-tax profit.
Now is a great time to capitalise on this market, with sales of exceptional assets to crystallise strong profit and to acquire high quality assets where active asset management can deliver returns. I’m delighted to announce that we have achieved this with the sale of 142 Fulham Road within 10 working days from agreeing terms and the acquisition of an exciting new asset on the Kings Road within 4 working days from agreeing terms.
Stay positive and proactive – opportunities to make hay are out there!
Thanks to AVIVA Real Estate and Gregor Bamert for inviting me to join the discussion.”