The global real estate market in 2025 is undergoing a transformative shift. Diverging dynamics across regions are creating both challenges and opportunities for investors. While vibrant activity continues in markets like Japan, India, and the Middle East, the United Kingdom remains a critical hub for mergers and acquisitions (M&A), supported by its economic stability and evolving sector demands.
This blog explores the UK’s position within the global real estate M&A landscape, drawing on insights from the Preqin Investor Outlook: H1 2025 and key market trends to guide business leaders in capitalising on emerging opportunities.
Balancing Caution with Strategic Action
Global real estate deal volume rose by 3% year-over-year in Q1 2025, primarily driven by activity in the Americas and Asia Pacific. However, deal volumes are expected to decline in Q2 2025 and may remain subdued through the rest of the year reflecting a cautious “wait and see” mindset among investors.
As the report notes: “Our conviction is that the slowdown in real estate M&A activity in the first half of 2025 is not a result of weak investor demand nor is it a reliable indicator of what lies ahead for the rest of the year.” In the UK, this sentiment translates into selective investment strategies, with a focus on assets that offer operational upside and long-term value creation.
Despite ongoing global uncertainties particularly around interest rates and GDP growth UK real estate continues to appeal due to its mature market and strong fundamentals. Investors are concentrating on geographies with resilient demand, and London remains a top draw for its rent growth potential and established infrastructure.
Sector-Specific Opportunities in the UK
The UK real estate market is aligned with the broader global trends outlined in the report, with particular strength in several key sectors:
Office
While cities like Tokyo, Paris, and Sydney show strong rebounds, London’s office market remains central to UK real estate. Demand is rising for high-quality, sustainable, and tech-enabled office spaces. At the same time, older buildings that fail to meet modern standards face obsolescence, prompting investors to pursue strategic acquisitions and repositioning.
Multifamily
This sector continues to attract global capital due to stable income streams and sustained housing demand. In the UK, multifamily growth is particularly evident in urban centres with rising populations and limited housing supply. Adjacent segments like student housing and co-living are gaining popularity, offering additional avenues for diversification and returns.
Retail
The report points to a retail comeback in Europe, with foot traffic returning to prime areas. In the UK, experience-driven retail formats especially mixed-use developments with leisure and dining options are outperforming. Properties integrating omnichannel strategies and data-driven operations are especially appealing to forward-looking investors.
Industrial
Amid global trade tensions and reshoring strategies, demand for industrial real estate is climbing and the UK is no exception. Logistics and warehousing, particularly those supporting e-commerce, are in high demand. The report also highlights rapid growth in data centres across Europe, positioning the UK as a strategic location due to its digital infrastructure and connectivity.
Strategic Shifts in Investment Approach
With the end of cap rate compression, investment strategies are evolving. As the report notes: “Real estate M&A activity is increasingly being driven by investors seeking strategic acquisitions that offer operational upside, platform efficiencies or repositioning opportunities.” This shift is evident in the UK as investors move beyond passive strategies. Active portfolio management, focusing on improving net operating income (NOI) through operational efficiencies and upgrades, is taking centre stage especially in the office and retail sectors. The report also highlights a global capital rotation, reinforcing the UK’s long-term appeal. While the US has historically led real estate investment, capital is now flowing to regions with better cost structures and demographics. The UK stands out with its stable monetary environment and urbanisation trends, making it a strong candidate for long-term value creation.
Investor Sentiment and Outlook
According to Preqin’s Investor Outlook: H1 2025, 34% of real estate investors plan to increase their capital commitments over the next 12 months. In the UK, investor optimism is balanced by prudence, with focus on assets backed by strong fundamentals.
London’s position as a global financial hub, combined with supportive government infrastructure policies, continues to sustain investor interest across residential, retail, and industrial sectors.
The report’s perspective on the second half of the year is especially telling: “As we enter the second half of 2025, the global real estate landscape is shifting and with it, so are the investment opportunities.”
For UK dealmakers, this calls for focused and flexible strategies. The strongest opportunities lie in assets aligned with demands for sustainability, tech integration, and experiential value particularly in high-growth sectors such as multifamily and data centres.
The UK real estate M&A market in 2025 offers a dynamic and evolving landscape for investors who are ready to act with clarity and speed. As the report aptly advises: “Dealmakers who act with focus and flexibility will be best positioned to benefit from this next chapter in real estate investment.”
For businesses, this translates into targeting strategic acquisitions that enhance portfolio performance and meet modern tenant expectations. Whether repositioning London office spaces, investing in multifamily housing, or riding the wave of data centre expansion, the UK remains a cornerstone of global real estate investment.
