Total UK commercial property investment reached £9.7 billion in Q1 2026, around 40% below the five-year first-quarter average, with overseas capital accounting for £3.6 billion

Overseas investment into UK commercial property dropped significantly in the first quarter of 2026, as currency movements, geopolitical uncertainty and development viability concerns dampened international appetite, according to a new report from Real Estate: UK and CoStar Group.

Total UK commercial property investment reached £9.7 billion in Q1 2026, around 40% below the five-year first-quarter average, with overseas capital accounting for £3.6 billion.

Despite the subdued overall figures, offices attracted £2.9 billion of investment — nearly 30% of total volumes — concentrated in London and select major regional cities. Industrial recorded its weakest quarterly performance in nearly six years, while retail remained subdued.

The weak opening to 2026 follows a strong 2025, when overseas inflows increased 33% year-on-year to £27.2 billion — the fourth strongest year on record — representing a record 56% share of total UK commercial property investment.

Build-to-rent investment reached a record £5.6 billion, while office investment recovered modestly as sentiment towards prime assets improved.

The UK continues to attract substantial international capital into real estate, reflecting the sector’s long-term strengths and the country’s reputation as a stable and transparent place to invest, said Melanie Leech, interim chief executive of Real Estate: UK. The strong performance in 2025 demonstrated continued confidence in UK real estate, particularly in sectors such as healthcare, rental housing and operational assets.

However, the significantly weaker start to 2026 highlights how sensitive international capital flows is to changes in the wider economic and geopolitical environment, she said.

She said: At the same time, investors continue to raise concerns about the challenges of deploying capital into new development and upgrading existing assets in the UK. Elevated construction costs, regulatory delays and policy uncertainty are all affecting development viability and investor confidence at a time when attracting long-term capital into housing, infrastructure and commercial real estate is critical to supporting economic growth.