The annual budget cycle in the UK is creating a vicious circle of commentary around weak growth, high inflation, and a black hole in the Government’s fiscal budget. At one point there was some semi-serious discussion around the possibility of an IMF bailout, as happened during the 1976 currency crisis. This is clearly feeding into investor sentiment; the UK has always been a destination of choice for global real estate investors, but some are now asking ‘why the UK’?

Not alone in its challenges

The UK economy clearly has its challenges, at the heart of which is a deteriorating demographic outlook and lacklustre productivity growth. But this is not unique to the UK; peer economies across Europe and Asia are equally challenged, especially in regards to the size of the working age population, while the current administration in the US is pursuing an agenda that is leaving many questioning the longevity of ‘American exceptionalism’. 

From a fiscal perspective, there is also plenty of nuance. The UK debt to GDP ratio of around 100% is the second lowest across the G7, behind only Germany, which until recently was bound by law to balance the budget. And the incumbent government is committed to fiscal sustainability, and (potentially) willing to break manifesto commitments on employee taxes, rather than water down its budget rules. The same cannot be said of other governments, including those in the US, France, and Japan. 

UK the world’s most popular destination for cross-border capital

There is no doubt that real estate investment volumes in the UK are substantially down on their pre-Covid-19 levels, but they don’t suggest that investors are voting with their feet. The volume invested in the UK this year is almost double the level invested in the next most active European market, and according to MSCI the UK has been the most popular destination in the whole world for cross-border investment in 2025, excluding land deals.

The outlook for the UK economy and policy might be relatively uncertain, but the country remains one of the most liquid and transparent real estate markets in the world. Possibly more importantly at the moment, the performance metrics are also looking good on a relative basis, with average total returns of over 10% on retail and industrial property, record levels of rental growth in some office markets, and high prime yields across most asset classes.

Considering all of the above, when asked the question, “why the UK?”, our response is simple; “why not?”. The UK does not stand apart from its peers, but in the current environment, that is not a bad place to be. Whatever happens at November’s budget, this is unlikely to change.  

Further information

Contact Oliver Salmon and Mat Oakley