UK real estate investment is showing early signs of recovery following a period of prolonged political and economic uncertainty, according to global property advisor JLL.
Despite a 25% drop in investment compared to the 10-year average, there are encouraging signs of stabilisation following the first reduction in interest rates and early signs of pricing recovery.
Investment levels stabilising
JLL’s data reveals that investment in the UK property sector reached £16.2 billion in the first half of 2024, down from the 10-year average of £21.5 billion but in line with figures seen in H1 2023. Total volumes, which include M&A activity, land, and development investment, rose by 12% year-on-year, reaching £22.6 billion.
Strong international interest
International investors have remained active, accounting for 52% of total investment in H1, reaffirming confidence in the UK’s real estate market despite a challenging environment. This demonstrates the enduring appeal of the UK to overseas investors.
Living sector maintains strong demand
The living sector, which includes residential segments such as student accommodation and retirement homes, attracted the largest proportion of investment for the third consecutive quarter. This sector saw £4.8 billion in investment, representing 30% of total market share, highlighting continued demand for residential property.
Regional investment trends
While London continues to be the top destination for both domestic and international investment, attracting £3.5 billion, it still represents a 46% decline compared to its 10-year average. Other leading regions included Greater London (£2.8bn), South East (£2bn), North West (£970m), and Scotland (£770m), all of which saw investment dips compared to their historical averages.
Outlook for H2 2024
Andrew Frost, Head of Capital Markets at JLL, acknowledges the mixed performance of the UK real estate sector in 2024. “A mild recession in late 2023 and political turbulence led to a cautious investment climate, but the sector remains resilient. With stabilising policies, proposed planning reforms, and optimism around further interest rate cuts, many investors are looking to H2 2024 as a prime opportunity to re-enter the market.”
Frost adds that these factors will be key in supporting the new government’s goals of driving economic growth through increased real estate activity.
