For the data behind the commentary, download our latest UK Investment Report.
ALIVE LATE 25? KICKING INTO 26?
After a quiet Q3, the final quarter of the year was relatively buoyant, with £17.5 billion transacted. This brought total investment volumes for the year to a healthy £58 billion, up 5% on 2024, but 13% down on the total measured during 2022. On a rolling annual basis, volumes are running just 1.2% down on the ten-year average.
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 1.5% for Q4 2025, and bringing 12 month total returns to 6%. Retail was the standout performer on both a 3- and 12- month basis, delivering total returns of 2% and 8.4% respectively. Shopping centres, in particular, posted quarterly returns of 2.7% and annual returns of 10%.
Other strongly performing subsectors include Supermarkets at 9.8%, Rest of UK Industrial at 9.4%. The Healthcare sector, after a stellar year in terms of volumes, saw returns of 6.8%. Offices finished the year at 3.5%, with all subsectors positive, apart from Rest of South East offices which saw a marginal negative return of just -0.2%.
In a wider context, direct real estate at 6% performed in line with bonds, outperforming Debt Funds (4.5%), but falling short of the 9.9% delivered by Global Infrastructure and the 25.8% delivered by Equities, after a strong end to the year.
At the prime end of the market, yields remain stable, as they have done for the majority of the latter part of the year. In fact, during the entirety of 2025, only ten of our markets saw any movement whatsoever.
