Almost half (47%) of British property company leaders believe life sciences will perform best in terms of financial return in the next 12 months, according to the British Property Federation’s Property Leader Sentiment Survey 2023.

The survey, produced in conjunction with developer Grosvenor, also revealed that 42% of respondents expect student accommodation to do well, followed by rented housing (41%) and warehousing/logistics (28%).

The survey results are based on responses from 105 UK property company leaders from across the industry, spanning owners, developers, funders, agents and advisers.

Asked to select their top three sectors by expected financial performance in the next 12 months, 27% said data centres would perform best, followed by healthcare (22%), retirement living (18%), co-working/flexible offices (10%), and London offices (8%).

Just 7% voted for hotels, followed by city/town-centre retail (5%) and out of town retail (4%), then leisure (3%) and residential for sale (3%). Regional offices received the least votes, at 2%.

The survey found 30% of leaders plan to increase investment in life sciences over the next five years, compared with 31% for warehousing/logistics and 41% for rented housing, while 26% chose student accommodation.

For 2023, 30% of the property leaders plan to keep their development activity the same, 19% plan to increase it a fair amount, but just 3% plan to increase it a great deal. Meanwhile, 12% plan to decrease development activity a fair amount, 1% plan to decrease it a great deal, while 9% are unsure.

The survey also found that London (40%) remains the UK’s most attractive investment destination for respondents, with the Midlands a strong second (28%).

Overall, the survey found that respondents’ 2023 outlook is negative, with just 15% confident about the UK’s economic prospects in the next 12 months, but the figure was 77% when looking to the next five years.

Economic issues dominate the list of leaders’ strategic concerns for the year ahead, with 57% citing UK economic uncertainty as the biggest strategic risk to their company.

Inflation/increased costs (56%), availability and/or cost of debt (41%), and political uncertainty in the UK (29%) were also high on the list, followed by the UK planning system (21%), changing customer demands (15%), climate change (10%), supply chain disruption (9%), the UK tax regime (8%), and ‘other’ (9%).