For the data behind the commentary, download our latest UK Investment Report.
Income dependent
During the last quarter we saw yields come in 25 basis points across three of our 45 markets – prime retail centres, as well as West End and City offices. Yields were stable across all other markets.
MSCI Monthly Total Returns came in at 0.6% - broadly where they have been during the course of 2025 so far. This continues to be driven by income, with just 0.1% capital growth, and 0.2% yield impact driving returns during June. In a turn up for the books, the star performer for the month was high street retail, which saw total returns of 1.2% for the month, leaving the subsector at 6.5% for the year.
Retail Warehouses and Shopping Centres saw growth more subdued at 0.5% and 0.9% respectively for June – although on a 12 month basis, returns remain strong at 11% and 13.2% respectively. Industrial total returns continue to run at 10.6% for the year, while in the offices sector, there is a difference between West End – 6.9% - and the rest of the office sector – broadly at ~2% for the year. The hotels sector saw a negative total return of -0.5%, taking the sector to 7% for the year, while residential continues to hold up well at 9.5% for annual returns.
The only way is up?
On 10th July, the English Devolution and Community Empowerment Bill was announced to include a proposal to ban upward-only rent review clauses with the Act. This would apply to all new leases and would mean that all rent review models would no longer be allowed if they only permit a rent to rise. Additionally, tenants would gain the right to initiate rent reviews.
While there is still some way to go on this becoming a reality, there are a number of potential implications – which you can read in more detail from our Lease Advisory experts here. From an investment perspective, it is worth noting that the UK’s model has long been a draw for investors. The changes would likely create greater uncertainty around income, affecting valuations, while also potentially increasing rental demands to compensate for downside risk (where markets allow) and drive further bifurcation in the market.
