Investment in UK real estate is showing signs of recovery following a prolonged period of uncertainty, says global property advisor JLL.
During the first six months of 2024 investment dipped 25% below the 10-year average as political and economic uncertainty deterred investors, however the first green shoots of recovery have emerged following the first reduction in interest rates and the beginning of pricing stabilisation.
JLL’s research showed investment in the country’s property sector reached £16.2 billion in H1, down on the 10-year average of £21.5 billion but in line with figures seen in H1 2023.
Although headline volumes remained slightly subdued throughout the first half of the year, overall volumes including M&A, land and development investment increased 12% year-on-year to £22.6 billion.
The data also shows international investors remaining active in the UK, accounting for 52% of the total in H1 and reaffirming confidence in the UK real estate market.
Elsewhere, the living sector – which includes all segments of the residential market including student accommodation and retirement homes – maintained demand attracting the largest proportion of investment for the third quarter running. JLL’s research showed it attracted £4.8 billion in investment, accounting for a 30% share of the market.
Across the regions London remains the biggest draw for both domestic and international investment. Though the £3.5 billion it attracted far outstripped anywhere else in the country, it amounted to a 46% fall on its 10-year average.
Greater London (£2.8bn), the South East (£2bn), the North West (£970m) and Scotland (£770m) made up the rest of the top five for investment volumes, though all saw dips on their respective 10-year averages.
Andrew Frost, Head of Capital Markets at JLL, says: “It’s been a tale of mixed fortunes for the UK’s real estate sector so far this year. A mild recession at the tail end of 2023, combined with a turbulent political environment, has meant many investors have taken a ‘wait and see’ approach to deploying capital.
“But the sector is resilient, as it has shown time and time again. Stability in policy, proposed changes to the planning system to make building less burdensome and optimism that interest rates will continue to fall means many will be eyeing the second half of the year as an opportune time to invest. Those factors will, in turn, be crucial to driving the economic growth the new government is aiming for.”
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