Political stability, resilient pricing and renewed confidence are creating firmer foundations for investment, growth and opportunity across the UK market.
Stable pricing, selective recovery
With the arrival of the seventh Prime Minister in the past decade, the UK may finally be entering a more stable political period. For investors, greater predictability is a welcome development and strengthens the UK’s investment proposition, from a commercial real estate viewpoint. Attention is already turning to the Autumn Budget, where the new Chancellor is expected to reinforce a commitment to fiscal discipline but hopefully pursue a pro-business agenda. Regional growth is likely to feature prominently, with a focus on attracting private and international capital and accelerating infrastructure delivery through targeted public investment. Combined, these measures could help unlock growth in innovation, R&D and advanced manufacturing, creating commercial real estate opportunities across the UK.
Against this backdrop, it was unsurprising to see prime yields remain stable in July as investors assessed the short- and medium-term outlook. Yet the extent of that stability is notable. The average prime yield has moved by only four basis points over the past 18 months, while February 2025 was the last month in which more than one sector recorded a yield change. This should not be mistaken for inactivity. Rather, it suggests that investors have largely adjusted to higher debt costs, geopolitical uncertainty and a weaker economic backdrop. The absence of further outward yield movement is an encouraging signal that pricing across prime commercial real estate has found a more durable footing, providing a firmer platform for investment activity as confidence gradually returns to the market.
Venture capital is growing but more required
The Government has an opportunity to build on the pro-business sentiment that has appeared in recent months. Yet, at a time when global capital is being directed towards artificial intelligence (AI), robotics, quantum technologies and biotechnology, that momentum cannot be taken for granted. Recent surveys suggest that almost half of UK scale-up founders remain pessimistic about the policy direction of the new administration. If growth is to become the defining aim of this Parliament, restoring confidence among entrepreneurs and investors should be a priority.
Across the UK’s leading innovation hubs, the impact of venture capital (VC) is clear. Investment is driving company formation, employment growth, and business expansion, while creating demand for offices, laboratories, advanced manufacturing facilities, and supporting infrastructure. VC remains one of the strongest indicators of future economic activity, particularly in sectors where the UK enjoys genuine competitive advantages.
The chart below illustrates VC raised by UK-headquartered companies over the past decade. Investment is expected to reach around £23 billion this year, representing annual growth of approximately 15%. This should support occupier demand through 2027 and 2028 as businesses deploy capital, expand workforces and establish new facilities.
However, the challenge extends beyond increasing funding volumes. Policymakers must create the conditions that encourage investment into businesses of all sizes and across all regions. Increased funding does not just support innovation; it drives productivity, employment and tax revenues.
Historically, around three-quarters of VC investment has been concentrated in London, the East of England and the South East. This year, that share is approaching 80%. For a government committed to regional growth, this highlights both the scale of the challenge and the opportunity available. The forthcoming Budget offers a chance to introduce policies that encourage a broader distribution of investment and economic activity.
The Industrial Strategy is a useful starting point, but greater emphasis should be placed on sectors where the UK can build lasting competitive advantages, including defence, fintech, life sciences, AI, and advanced manufacturing. The UK’s challenge is not generating innovation. It is ensuring that capital, talent and growth are spread more widely across the country. If achieved, the benefits will be felt in jobs, productivity, tax revenues and demand for commercial real estate alike.
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