Overseas Investors Grab Bigger Share as UK Commercial Real Estate Value Drops to £949 Billion

Overview of UK Real Estate Market

The Investment Property Forum report shows that the UK’s commercial real estate value now sits at £949 billion. In 2020, it was worth £1.114 trillion. The UK as a whole, with its houses and offices, now totals £9.3 trillion by the end of 2023. The Cambridge Real Estate Centre made this report on March 28, 2025. The report points out trends that may affect investors, especially those who think about Houses in Multiple Occupation (HMOs).

Decline in Commercial Property Values

The report shows that the value of commercial properties has fallen over the last three years. In 2021, yields dropped and rents began to grow. Later, bond yields and interest rates moved up. This change made the market shrink. Today, the UK has 682 million square metres (6,700 million square feet) of commercial floorspace. The report splits the market into parts:

• Retail Sector: £275 billion
• Offices: £221 billion
• Industrial Sector: £366 billion
• Other Commercial Real Estate: £88 billion

This split helps investors decide where they can find good results. The industrial and “other” parts may pay better than the weaker retail part.

Shift Towards Overseas Ownership

The report also finds that more foreign investors now own UK properties. In 2003, they held 14% of the market; today, they hold 40%. This change affects investors in HMOs as well:

• Mixed Investment Types: Foreign buyers now spread their cash away from London offices. They also buy houses, student flats, and industrial buildings.
• Foreign Funds Influence: Major funds from Norway, Singapore, and Qatar hold over £31 billion in UK real estate. This fact shows that the world has strong trust in the UK market.

Domestic Investment Landscape

The report notes that UK investors now hold less market share. Insurance companies and pension funds in the UK have cut their stakes. Today, UK insurers own only 6% of the market instead of 20% two decades ago. Pension funds have dropped their direct cash from £43 billion to £32 billion in three years.

Still, UK pension funds play an important role. They help with over £100 billion in funding through different channels. Investment in houses is growing, as investors work to meet the high demand for rent.

Conclusion

The Investment Property Forum report paints a clear picture of the UK commercial real estate market. Total property values have dropped, yet foreign investors now hold more control. This change opens new paths for those who think about HMOs and other parts of the market. The rise in residential property investment may allow new investors to find good returns. With the market changing, UK investors face the need to adjust and stay strong.

Sources

• Investment Property Forum – The Size & Structure of the UK Property Market
• CoStar Group News – Report on UK Real Estate
• Cambridge Real Estate Centre – Market Analysis

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Disclaimer: This article has been generated by AI based on the latest news from Google News sources. While we strive for accuracy, we recommend verifying key details from official reports.