For the data behind the commentary, download our latest UK Investment Report.
PRE-BUDGET
Investment volumes totalled just £10.4 billion for Q3 2025, the lowest quarterly investment volume since Q4 2023, albeit broadly in line with the amount of activity seen during the same quarter last year. The positive news, is that since the quarter-end, we have already seen a number of large transactions complete and more go under offer.
UK commercial real estate performance continued to show resilience in the third quarter, with the MSCI UK Quarterly Property Index delivering a total return of 1.4% for Q3 2025, marking stable performance over the last three quarters, and bringing 12 month total returns to 6.6%. Retail was the standout performer on both a 3- and 12- month basis, delivering total returns of 2% and 9.2% respectively. Shopping centres, in particular, posted quarterly returns of 2.7%, with Rest of UK Industrial the second best performing sub-sector of the quarter at 2.4%. However, at present, while investor conviction on the former has strengthened, the depth of investor demand for industrial and logistics has eased somewhat.
Average equivalent yields have moved out across a number of sectors during the last two quarters. At the prime end of the market, yields remain by and large stable, with the only monthly movement being across two markets – prime London BtR and prime Leisure Parks, both of which came in 25 basis points.
The divergence between the UK NAREIT index and the FTSE100 remains pronounced – a continuation of the trend observed earlier in the autumn – suggesting that equity investors remain considerably less bullish on real estate than they are on other parts of the economy. Sentiment is muted in advance of the Autumn Budget.
