For the data behind the commentary, download our latest UK Investment Report.
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Q2 saw approximately £10 billion transact, meaning that we are now running at just over £27 billion for the first half of the year, in line with the same period last year but 7% down on the ten-year H1 average. On a rolling annual basis, we are running at £55 billion.
Investment continues to be driven by overseas capital, particularly from Asia and the Middle East – while the amount of capital deployed from the US slowed marginally during the quarter, against a backdrop of tariffs and trade wars.
Yields remain by and large stable, with the only monthly movement across prime supermarkets which saw yields come in 10 basis points.
Total returns for the quarter totalled 1.4% for the quarter, meaning that we are now running at positive total returns for the sixth consecutive quarter, bringing annual total returns to 6.7%. However, there continues to be a difference among sectors, with supermarkets the strongest performing sector during the quarter – at 2.5%, with industrial and all retail matched at 1.8%. At the other end of the spectrum Rest of UK offices came in at 0.2%, with South East offices at -0.1%.
We are still seeing performance driven by income, with capital values increasing by just 0.2% during the quarter – albeit the positive news is that with just 29% of assets seeing a fall in value, this was the lowest proportion of asset value falls seen since June 2022. While the interest rate decision is positive news, there remains a question mark on the trajectory going forward, which will continue to create uncertainty on business planning. For more information, including on the interest rate decision see our Economy and Housing Marketbeat.
