Annual Review 2024: Predictions for Asset Valuations in 2025

Annual Economic Review 2024: Predictions for Asset Valuations in 2025

The UK’s economic developments throughout 2024 set the stage for significant implications on asset valuations in 2025. With bold green energy initiatives, substantial infrastructure investments, and the enduring challenge of slow productivity growth, the economic landscape presents both opportunities and risks for businesses and investors in the year ahead.

In this review, we reflect on the key developments of 2024 and offer predictions on their impact for 2025, including:

• The potential long-term effects of sector-specific capital investments in renewable energy, nuclear power, and carbon capture on asset valuations.
• How infrastructure spending and taxation policies may influence business confidence and market activity.
• Trends in asset finance, with insights into growth in plant and machinery funding and light commercial vehicles.

Reflections on Labour’s Productivity Focus and Regional Growth

The UK’s persistent struggle to achieve sustainable productivity growth continued to shape the economic trajectory in 2024. Despite efforts to address regional inequalities, underinvestment in public and private sectors remains a barrier, particularly outside of London. This productivity challenge will likely weigh on asset valuations in 2025, especially in regions that lag behind in attracting investment.

Key Sector Investments in 2024: Setting the Stage for Transformation

Last year saw the introduction of ambitious sector-specific capital investments aimed at driving innovation and sustainability. These initiatives will have ripple effects in the coming year:

1. Carbon Capture, Utilisation, and Storage (CCUS):
   • The £3.9 billion allocated for 2025-2026 CCUS Track-1 projects and contracts with 11 green hydrogen producers could enhance the valuation of industrial and energy-related assets tied to decarbonization efforts.
2. Renewable Energy:
   • The £1.5 billion for clean energy projects and additional funding for offshore wind and solar energy positions renewable energy assets for strong growth in valuation.
3. Nuclear Power:
   • The £700 million investment in Sizewell C and the reclassification of nuclear power as “environmentally sustainable” may boost investor confidence, driving up valuations in the nuclear energy sector.
4. Green Economy:
   • The £14 billion green economy boost through the National Wealth Fund could attract substantial private investment, potentially tripling its impact and enhancing the value of green infrastructure projects.

Infrastructure and Public Services: Implications for 2025

Major infrastructure commitments in 2024 will likely influence asset valuations in 2025:

• Roads: The £1.6 billion for road maintenance and EV charging points will increase the value of assets linked to transportation and clean mobility.
• Digital Infrastructure: Investments in broadband and 5G expansion are expected to elevate the valuation of digital assets and technology infrastructure.
• Public Services: The £100 billion allocated for schools and hospitals, alongside £20 billion for local transport, will enhance social infrastructure asset valuations.

Housing and Transport: Long-Term Market Drivers

Housing and transport investments in 2024 will carry forward into 2025:

• Housing: The £5 billion for affordable housing will increase demand for development-related assets.
• Transport: Projects such as the Trans-Pennine Route Upgrade and HS2 tunneling will likely strengthen the valuation of transport infrastructure assets.

Taxation and Consumer Confidence: Balancing Growth and Constraints

The increase in taxation across various areas, including employer NICs and capital gains, could dampen consumer and business confidence in 2025. This fiscal burden may restrain growth in discretionary asset valuations, although strategic investments in high-growth sectors could offset some of these effects.

Asset Finance: Trends and Forecasts for 2025

The asset finance market exhibited resilience in 2024, with notable growth in plant and machinery funding (up 4%) and light commercial vehicles (up 15%). However, the softening of growth trends on a 12-month rolling average suggests cautious optimism for 2025.

Direct finance will likely remain the dominant sales channel in 2025, while vendor and broker finance may face challenges from tightened market conditions. How the 2024 Budget influences Q4 performance will provide clearer insights into 2025 dynamics.

Looking Ahead: Opportunities and Challenges in 2025

The UK government’s investments in green energy, digital infrastructure, and public services provide a strong foundation for future growth. However, challenges such as higher taxes and slow productivity improvements may temper the outlook for asset valuations.

Annual Sector Reviews 2024: 

Construction Industry Review

The construction industry in 2024 faced significant challenges, as declining sales of construction and earthmoving equipment highlighted the sector’s struggles. Retail sales dropped nearly 15% year-on-year in September, contributing to a 9% decline in Q3 sales compared to the same period in 2023. While this was an improvement over the over 20% declines recorded in the first half of the year, cumulative sales for the year remained 25% below 2023 levels. Despite some signs of recovery in the latter part of the year, the industry remained under considerable pressure throughout 2024.

Sales trends varied significantly by equipment type. Telehandlers for construction demonstrated the most resilience, with sales down only 12%, whereas wheeled loaders and crawler excavators saw sharper declines of 21% and 26%, respectively. Lower-volume products grouped as “Others” suffered the most, with sales plummeting nearly 40%. Affordability emerged as a key factor in purchase decisions, with contractors increasingly turning to used equipment over new machinery. This was reflected in Finning’s performance, where used equipment sales nearly doubled, even as new equipment sales remained flat.

Market Trends and Insights

The economic conditions in 2024 created opportunities for equipment rental companies, with Ashtead Group reporting a 9% year-on-year increase in rental-only revenue in the UK, 7% of which was organic growth. Higher rental prices and increased volumes drove this growth, as companies sought cost-effective solutions by renting rather than purchasing equipment. This shift toward rentals became a defining trend of the year, reflecting broader economic uncertainties and high equipment costs.

Despite the downturn in sales, modest optimism emerged as the year closed, with projections for 2025 indicating a slight improvement. An estimated 30,600 units of construction machinery are forecasted to be sold, representing a 1.6% year-on-year increase. However, sales volumes are unlikely to return to 2023 levels before 2027, as the post-Covid rebound that characterized 2023 proved unsustainable.

The Labour Party’s manifesto pledge to boost housebuilding created some anticipation for increased construction activity, but its impact remained largely unrealized in 2024. Future policy-driven growth in the sector remains a potential catalyst but was not a significant factor during the year under review.

Implications for Asset Valuations

1. Used Equipment Values: The growing demand for used equipment in 2024 sustained higher valuations for well-maintained machinery. Telehandlers, with their relatively strong sales performance, saw robust demand in the secondary market, supporting their asset values.
2. Rental Market Growth: The expansion of the rental market boosted the value of rental fleets, particularly for companies with modern and reliable equipment. This trend underscored the importance of effective asset management for rental providers.
3. Depreciation of New Machinery: The sluggish recovery in new equipment sales in 2024 resulted in accelerated depreciation rates for new machinery, as demand remained subdued.
4. Policy-Driven Opportunities: While government plans to stimulate housebuilding held promise, their impact on equipment demand and valuations remained speculative as of 2024. Any meaningful effect is expected to materialise in the medium term.
5. Sustainability Considerations: The push for more sustainable construction practices continued to influence asset valuations. Equipment with lower emissions or electric models gained attention, with the potential to command premiums in the market.

Conclusion

Reflecting on 2024, the construction industry navigated a challenging year marked by declining equipment sales and economic uncertainty. The growing preference for used equipment and rentals defined the market, with these segments emerging as key drivers of value. While modest recovery is anticipated for 2025, significant growth is unlikely before the latter part of the decade. Asset valuations in 2024 reflected these dynamics, with used machinery and rental fleets maintaining strong demand, while new equipment faced downward pressures. The potential for policy-driven growth and sustainability trends adds layers of complexity to the outlook, warranting close attention from industry stakeholders.

To understand how the above trends and insights could impact your business, we encourage you to contact our industry expert, and Managing Director Tim Howard. With extensive experience in construction asset valuations and market analysis, Tim can provide tailored advice to help you navigate the challenges and opportunities.

Transport Sector Review

The transport sector faced considerable challenges in 2024, including rising costs, labor shortages, and economic uncertainty. These pressures will continue to influence asset valuations throughout 2025, with varying outcomes across different sub-sectors and asset types.

Operating Costs

Operating a 44-tonne articulated vehicle became 9.2% more expensive in 2024 (excluding volatile fuel costs), while vehicle prices remained 30% higher than pre-COVID levels. Tight margins and operators’ inability to pass on inflationary costs have limited fleet reinvestment. Demand for new vehicles may remain subdued, likely suppressing valuations for older, mid-tier vehicles. However, premium assets offering greater operational efficiency are expected to retain or increase value.

Driver Shortage

The industry continues to face a driver shortfall of 50,000, with over half of the current workforce aged 50–65. Attracting younger talent remains a significant challenge. This persistent labor shortage is accelerating demand for autonomous-capable vehicles and driver-assist technologies. Assets equipped with these capabilities are likely to see higher valuations as operators explore long-term solutions to reduce dependency on human drivers.

Economic Uncertainty

Weak economic growth, high inflation, and reduced demand in key sectors like hospitality, retail, and manufacturing weighed heavily on the industry in 2024. Freight volumes fell by 10–15%, but e-commerce and urban logistics showed resilience. In 2025, demand for rigid box vans, which support these sectors, is expected to grow, driving stronger valuations for these assets.

ZEV Adoption

Zero-emission vehicle (ZEV) adoption remained limited in 2024, with only 51 units sold compared to 10,788 internal combustion engine (ICE) vehicles. Barriers include inadequate charging infrastructure and insufficient government incentives. While urban delivery fleets may drive niche demand for ZEVs, broader adoption—and consequently stronger valuations—will depend on substantial investment in infrastructure and policy support in 2025.

Vehicle Registrations and Market Trends

Tractor unit registrations declined in 2024, reflecting market saturation and economic uncertainty. However, rigid box van registrations increased, driven by e-commerce and omnichannel logistics demand. Fleet operators shifted their focus toward value-driven purchases rather than prestige brands, highlighting an industry-wide emphasis on cost efficiency.

Looking Ahead to 2025

While economic headwinds will continue to affect the broader sector, specific sub-sectors offer opportunities for growth. Rigid vehicles supporting urban logistics and e-commerce are well-positioned for value appreciation, while technology-driven assets such as ZEVs and autonomous-capable vehicles may command premiums as adoption slowly progresses. However, high borrowing costs and financial constraints will likely temper the overall pace of recovery.

Navigating these trends is essential for protecting and maximizing the value of your transport assets. Whether you’re managing a fleet, considering investments, or evaluating your current portfolio, expert guidance can provide a strategic advantage.

Contact James Fox, Hickman Shearer’s transport sector expert, for a tailored consultation. With years of experience in asset valuation and a deep understanding of industry dynamics, James can help you make informed decisions and capitalize on opportunities in 2025. Reach out today to ensure your transport strategy is future-ready.

Broadcast Sector Review

The broadcast sector in 2024 has been marked by dynamic shifts in technology, market demands, and disruptions from adjacent industries. While many segments of the sector have shown resilience, significant challenges and opportunities lie ahead, shaping the outlook for 2025.

Key Characteristics of the Broadcast Sector

The broadcast and cinema sectors share foundational technologies, including cameras, lenses, and grip equipment, yet their purposes diverge significantly. Broadcast prioritizes connectivity and real-time delivery, while cinema emphasizes quality and artistic expression.

• Cameras: Broadcast cameras are designed for modular, component-based systems with seamless connectivity for live production, whereas cinema cameras focus on delivering unparalleled image quality tailored to storytelling.
• Lenses: In cinema, lenses are key to creating mood and fashion, with a wide range of OEMs catering to diverse artistic needs. In contrast, broadcast lenses are built for practical, high-performance delivery.
• Grip Equipment: Built to last, grip assets in both sectors exhibit a long lifecycle, providing stability and longevity in investments.

The overarching “glue” binding broadcast production is its emphasis on connectivity—ensuring smooth delivery of content in real-time environments.

Outside Broadcast (OB)

The OB segment reached a technological peak in 2024, driven by the adoption of 4K and IP-enabled systems. The complexity of OB setups ranges from small units to triple rigs, with chassis and box systems often lasting up to 20 years. Key assets such as vision mixers, sound desks, talkback systems, and routers remain critical for operations.

However, these assets are illiquid, often tied to specific contracts or use cases. Transactions are less frequent and only occur as new contracts or technological shifts demand upgrades.

Post-Production

Post-production continues to operate in niche markets, primarily clustered in Los Angeles and Soho. While physical desks and control surfaces endure, the dominance of OEMs like Avid has waned, as new software disrupts the market. Despite its limited reach, post-production has shown resilience, adapting to technological and market demands.

Screens

Screens represent a thriving and fast-growing segment. With a lifespan of 6–8 years and total operational hours averaging 100,000, this market is poised for substantial growth. In the United States alone, revenues are projected to grow from $21 million in 2024 to $47 million by 2030. Established OEMs, especially in PRC (China), are well-positioned to capitalise on this demand.

Major Changes in the Sector

The broadcast industry faces increasing disruption from the rise of streaming platforms, shifts in sporting contracts, and the growing influence of social media among Gen Z audiences. These disruptors are driving market consolidation and an accelerated exit from terrestrial broadcasting, creating both challenges and opportunities.

Failures in the sector have been driven by a combination of physical obsolescence, market pressures, and technological evolution. As traditional players navigate these disruptions, survival hinges on the ability to adapt to changing consumer preferences and new delivery platforms.

Outlook for 2025

Looking ahead, the broadcast sector must address critical risks while capitalizing on opportunities:

1. Technological Adaptation: The continued adoption of IP-enabled systems and higher-resolution capabilities (e.g., 8K) will be pivotal.
2. Market Consolidation: Terrestrial broadcasters face mounting pressure from streaming platforms, necessitating partnerships or pivots to survive.
3. Social Media Integration: Platforms tailored to Gen Z consumption habits, such as short-form and interactive content, will influence broadcast strategies.

While some players may falter, those that survive until 2025 are likely to emerge stronger, equipped to navigate a rapidly evolving industry landscape.

Understanding these trends is critical for navigating asset valuations in 2025. Whether you are managing a portfolio of equipment, considering new investments, or evaluating your current assets, expert guidance can make the difference. Contact managing director Tim Chapman, Hickman Shearer’s broadcast sector expert, for an in-depth consultation. With extensive experience in asset valuation and deep industry insights, Tim can provide actionable advice to help you maximise the value of your broadcast assets.

At Hickman Shearer, we specialise in delivering exceptional RICS and ASA certified capital asset valuation, management, and sales services. Our expertise span a wide range of global industries, ensuring that we provide tailored and insightful commercial valuations and equipment valuation services to meet your unique needs. Find out more here >> About Us

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