Credit conditions slip to lowest level since 2023
UK commercial property sentiment weakened in the first quarter of 2026, with surveyors reporting a more cautious investment climate after a rise in geopolitical tensions in the Middle East, according to the Royal Institution of Chartered Surveyors (RICS).
The RICS UK Commercial Property Monitor showed a marked deterioration in credit conditions. Its credit conditions indicator fell to -44% in Q1 from +9% in the final quarter of 2025, the lowest level since the third quarter of 2023.
Capital value expectations also softened. Across all property types, the 12-month outlook moved to a net balance of -18%, compared with -5% in the previous quarter.
The findings point to a more difficult funding environment for commercial real estate, with higher bond yields, energy costs and inflation concerns cited by respondents as factors affecting confidence.
The occupier market was more stable. The headline Occupier Sentiment Index was -10, little changed from the previous quarter. Tenant demand across all property types stood at -8%, against -9% in Q4.
Occupier and Investment Sentiment Indices 
Source: RICS UK Commercial Property Monitor
Rental expectations remained positive in some prime segments. RICS said prime office rents were expected to increase by 2% over the next year, while prime industrial rents were forecast to rise by 2.1%. Prime retail rents were expected to fall by 0.5%.
London continued to perform better than some other areas, particularly in prime offices. Prime office rents in the capital were forecast to rise by 2.5% over the next 12 months, down from 3.3% in the previous survey. Expected capital value growth for prime London offices was cut to about 0.9%, from 2.8% in Q4.
Alternative property sectors remained ahead of mainstream assets, although expectations were also lower than before. Data centres recorded the strongest outlook, with rents expected to rise by 3.5% and capital values by 3.3% over the year ahead. Aged care, multifamily residential and life sciences assets were also expected to see limited growth.
“The occupier side of the commercial property market has, to date, shown little visible impact from the increasingly difficult global geopolitical environment, with survey indicators tracking demand levels, availability and rental expectations largely unchanged since late last year,” said Tarrant Parsons (pictured right), head of market research and analysis at RICS.
“However, the negative macroeconomic consequences of the conflict in the Middle East are evident in the investment market, most notably through tighter credit conditions and growing caution around near term capital values. This is weighing on confidence just as the market had begun to display tentative signs of recovery.
“Whether this represents a short-term interruption or the beginning of a more prolonged slowdown will depend on how quickly the current disruption across global energy markets begins to ease.”
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