UK investment volumes dip in Q2 2025, but London remains Europe’s top market
UK investment in real estate dropped by 11% in the second quarter of 2025, according to fresh data from MSCI’s Europe Capital Trends report. Despite the slip, the UK continues to lead the continent’s property market.
Transaction volumes in Q2 stood at €13.9bn, down from the same period last year. Yet, the country still outpaced its closest rival, Germany, by more than double. It’s a sign that, even with market headwinds, Britain remains Europe’s investment hotbed.
London, unsurprisingly, held onto its crown as Europe’s top destination for real estate investment. However, the capital didn’t escape the downturn. Investment in London property was down 17% in the first half of 2025, compared to H1 2024.
Still, there was one bright spot, the offices. Investment in UK office assets rose by 27% in the first half of the year. Central London offices were particularly in demand, offering a glimpse of investor confidence in core markets.
Across Europe, the commercial property landscape showed signs of strain. MSCI’s data suggests the first six months of 2025 were sluggish overall, with many investors rattled by concerns over US trade tariffs and their potential knock-on effects on European economies.
In Q2 alone, real estate deals worth €46.2bn were completed across Europe, a 10% drop year-on-year. Cumulatively, the first half of the year saw €91.7bn in deals. That’s 7% less than the same time in 2024.
Tom Leahy, head of EMEA real assets research at MSCI, explained: “The uncertainty that followed US tariff announcements in April meant it was natural some investors would pause from making real estate deals while they waited for clarity.
In contrast to the volatility in equity markets, real estate’s illiquidity means lower deal volumes are often the first response to external shocks, like those of April 2.”
But it’s not all gloom. Leahy sees hints of optimism creeping back in. “There are some tentative signs that things may be settling down. The pipeline of deals pending completion at the start of July was the strongest in three years, suggesting a modest rebound.
Falling interest rates in the Eurozone are supportive for pricing, and certain occupier markets have been performing robustly.
Some segments of Europe’s most liquid office markets are also recovering. This bodes well for a better second half of the year, assuming there are no additional shocks.”
As things stand, while UK investment volumes have taken a knock, the nation’s real estate market still commands the lion’s share of European investor interest. Whether the second half of 2025 brings a rebound remains to be seen, but early indicators are encouraging.
