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We expect investors will deploy capital with caution in 2024. Many investors will consider only the most sought-after opportunities that are backed by the strongest tenants in dominant locations, offering alternative use underwrites. While we anticipate there to be good traction for these opportunities, the secondary market is likely to remain relatively illiquid unless vendors are willing to accept significant pricing movement.

Key Takeaways

  1. We anticipate further softening of yields in the first half of 2024 and suppressed trading and investment volumes. We also consider that the gap between prime and secondary assets will widen as investors retreat to proven assets of good quality in strong locations.
  2. We predict further distress in 2024 as lenders and operators face ongoing operational challenges, as well as a gap in debt/equity, following a reduction in capital values. Lenders and stakeholders will need to make increasingly difficult decisions in 2024, something which has been part of the 'wait and see' approach in 2023. 
  3. Operational performance will remain under pressure in 2024, but some of the record high costs seen in 2023 will start to ease. Discretionary spending and disposable income remain issues across the country, which could impact revenues.
  4. Operators and owners seeking to raise capital might turn to traditional sale and leaseback, or a form of commercial ground rent. This is now seen as a way of retaining operational control to place the capital receipts elsewhere rather than purely value accretion through the transaction itself.
  5. Across the pub sector, with an increasing supply of investment properties coming to market, we expect the pressure to sell for several vendors will result in continued pressure on yields and pricing.

Holiday parks 

Holiday hire revenues have been positive, which has increased “in-park” spend. However, home sales have come under increasing pressure and have caused a drag on financial performance. General pressure on costs and overheads have also been significant in 2023. Still, we see this easing in 2024, especially regarding wages, COS and utilities. We expect continued strong performance in 2024 from the core park revenue streams, but home sales are not predicted to return to former levels until the wider economic picture is more positive.  

Health and Fitness 

The market value of the UK’s health and fitness club sector reached an all-time high of £3.52bn in 2023. This reflects the ability of operators to increase membership prices above inflation without suffering detrimental levels of membership churn. Evidently, consumers continue to prioritise their health and wellbeing expenditure against the backdrop of the cost of living crisis. However, with a continuous squeeze on disposable income levels and sustained high OpEx levels, we anticipate operators will implement more innovative membership options in 2024, which will appeal to a broader range of consumers. 

Racquet club operators have proven to be the most successful through 2023, owing to expansive premium facilities that have retained an affluent membership base.  

We expect racquet club operators to continue a CapEx intensive expansion strategy, with new club openings and refurbishments anticipated throughout 2024. Similarly, the low-cost segment has cemented its appeal amongst those looking for flexibility and affordability, with the number of budget gyms reaching an all-time high of 869 in 2023 (up from 645 in 2018). Mid-market operators will continue to focus on recovery and estate consolidation with refurbishment schemes deployed selectively. We anticipate that there will be some corporate activity in 2024 amongst the racquet and mid-market operators.

Figure 29: Pubs and restaurants sales recovery

Source: CGA RSM Business Tracker


Significant price increases are driving sector recovery, with strong growth throughout the year despite the cooler summer. The sector now looks forward to the critical Christmas season, and although there is no World Cup, there is hope that business will not suffer from the rail strikes which dampened trading last year. 

As stabilised trading positions become more certain and reduced margins will be a longer-term feature, we expect to see an increasing amount of corporate activity and rationalisation going into 2024. In the investment markets, concern around rental levels and tenant liquidity means that real estate fundamentals and vacant possession underpin are critical to investment pricing. With an increasing supply of investment properties coming to market, we expect the pressure to sell for several vendors will result in continued pressure on yields and pricing.