Real estate

The UK’s towns and cities have the development of a resilient and sustainable environment at the heart of their economic ambitions.

The sector contributes to the development, repurposing and regeneration of a wide range of asset classes and underpin critical sectors such as life sciences and advanced manufacturing.

Employing over 12 million people, the property sector contributes £1.7 billion annually to UK GDP.

Opportunity highlights

The UK remains the first port of call for international capital and is a leading force in:

• green building design
• green construction
• green asset use
• repurposing of existing assets
• green finance

Development companies in the UK employ innovative and world-class standards in the creation of urban mixed-use environments.

They’ve trailblazed the implementation of de-carbonisation strategies for existing assets and supported the emergence of green asset portfolios that are available prime for real-estate investors.

Investors have established platforms from which to diversify into traditional and emerging asset classes, such as operational real estate.

In terms of performance, the UK offers a remarkable return of 7.1% per annum (IPF) with a 5-year average property investment forecast.

Commercial maturity

The UK’s real estate market is a destination of choice for sovereign and institutional capital. This is because of its time zone, rule of law and language, as well as the growing success seen in the de-carbonisation of our environment.

JLL, a leading adviser, is now confidently predicting that overseas real estate investment volumes into the UK will have topped the £60 billion invested last year.

Key UK assets

The UK real estate market continues to be robust, with performance particularly strong in the industrial and logistics market, the residential and student sectors, plus London and regional offices.

As international investors seek new avenues of returns, further market diversification is now expected.

Life sciences

There has been unprecedented investor appetite in specialist life sciences real estate in 2021, with investment in excess of £2 billion invested to date.

With supply typically constrained and high rents, this trend is set to continue with an estimated £20 billion of capital targeting this sector.

Logistics

With strong demand and weaker supply, rents will rise further for well-located assets in peri urban areas. Yields are expected to further compress, as less specialised investors find ways to access the market through M&A and joint ventures.

Urban centres, urban villages and sustainable communities

Changes to the ways we live and work offer opportunities for the repurposing and regeneration of existing property and the development of new communities. The introduction of new technology and sustainable options offers new investment models, alongside more traditional ones.

Retirement living

By 2025, 20% of the UK population will be over 65. Research has shown that many retirees want to live in retirement accommodation, but there is a lack of high-quality housing with care in appropriate locations. It’s been estimated that there is significant potential innovation and growth in this sector.

Residential and student housing

Residential property has been a surprise performer during the pandemic, with stabilisation at universities and student accommodation picking up.

Investment levels into institutional rental property have been sustained and is forecast to hit new records over the next few years.

Offices

Office take-up is a returning trend in 2022. Equity targeting the central London prime office market remains high and is driving recovery from the pandemic as uncertainties resolve.

Flexibility, ESG, and meeting employee lifestyle needs will drive development standards as organisations seek to future proof their offices. Value add opportunities are emerging from this in multiple UK cities.

R&D capability

The UK’s Building Research Establishment (BRE) delivers innovative and rigorous products, standards and qualifications. These are used around the globe to make real estate better for people, the environment and investors.

The BRE’s BREAM rating is the world’s leading sustainability assessment method for master planning projects, infrastructure and buildings.