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2025 is heading into the third quarter with the UK’s CRE market on a stronger footing than previous years.
Positive momentum among key markets, as well as strong interest from overseas investors, represent core indicators that confidence is returning.
Here, we explore some of the fundamental reasons for optimism as we look towards 2026.
An extended flux in the market caused by the infamous mini-budget saw the UK lose its crown as the most investable European country for overseas investors.
However, with the dust settling, followed by a series of interest rate drops, Knight Frank reports that the nation is back on its perch (or throne, to continue the metaphor).
Nearly £10bn of cross-border inflows entered the UK market in the first half of 2025, accounting for almost half of total UK CRE investment. This is an important statistic.
This investment is, in part, being driven by investors from the UAE taking advantage of decade-low prices and tax changes to buy swathes of London property.
According to the Financial Times, investment by Emirati nationals accounted for 3% of prime property international investments in the year up to July.
Alongside positive overseas investment data, several key sectors in the UK have experienced strong growth, particularly in London, indicating that the sector is in good stead for the rest of the year.
Savills has raised prime rental growth expectations, with the City and the West End predicted to show 4.2% and 4.1% growth per annum between 2025 and 2029, respectively.
Canary Wharf Group’s office buildings alone have increased in value by 0.4% to £4.3bn.
This is a reversion of the slide the company has experienced over recent years; footfall has also grown significantly within the district.
Their growth reflects a broader trend across the UK, with office values growing across Q2 thanks to favourable yields and rental growth, in part cascaded through Permitted Development Rights conversions to residential for overhanging stock.
Finally, Savills also forecasts over £2.7bn of central London investment across 2025. This figure is the highest since 2018, with much of the investment in retail space, particularly in the West End.
The UK’s CRE sector has reimagined itself over 2025, but sustaining this into 2026 is by no means a certainty.
The sector’s recovery remains exposed to the success of the wider economy and to the risks that an unstable global geopolitical environment poses. These risks are visibly and conceptually systemic.
However, with CBRE pointing towards continued capital growth, better lending sentiment and an increase in major transaction volumes, we could be in for a continued period of improved performance. This, we posit, can be attributed in part to the distinct and island nature of the UK market.
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