2025 was, in many respects, a frustrating year, ending with a series of kite-flying in the lead-up to the Autumn Budget. Yet, through this turbulence, the UK real estate market has shown remarkable resilience. That resilience underpins a sense of realistic optimism as we enter the next phase of the cycle.

Global dynamics will continue to shape our outlook. The stability of the US, alongside tensions involving China and Russia, will be the most significant drivers influencing UK real estate over the next 12 to 24 months. If geopolitical stress eases, interest rates and inflation are likely to fall, creating a calmer environment for decision-making. After years of constant strain, confidence matters — and confidence is built not only on real estate fundamentals but also on the macroeconomic and political backdrop.

For 2026, the story on interest rates is encouraging: expectations point to a 50-basis-point reduction, bringing rates closer to 3%. This shift, combined with narrowing bid-ask spreads and greater realism among vendors, suggests a market ready for more activity. Residual pent-up demand in residential remains, rural property continues to attract strong interest, and scarcity in prime offices, retail, and industrial space is driving rental growth.

Challenges do persist. Development viability is still under pressure, though signs of adaptability and lower financing costs offer some hope. ESG priorities have taken somewhat of a back seat amid global uncertainty, but sustainability and diversity remain essential for the industry and for Savills. We are committed to supporting these principles as the market evolves.

As we move into 2026, confidence in UK real estate is layered — shaped by both micro-market factors and global forces alike. At Savills, we believe this year offers the prospect of renewed momentum and positivity. With resilience, adaptability, and a clearer economic outlook, the sector is poised for a better year ahead.

Read each section of the report below.