International inflows slow as currency shifts and global uncertainty weigh on activity
Overseas investment into UK commercial property declined significantly in the first quarter of 2026, as currency movements, geopolitical uncertainty and development viability concerns dampened international appetite, according to a new report from Real Estate:UK and CoStar Group.
Total UK commercial property investment reached £9.7 billion in Q1 2026, approximately 40% below the five-year first-quarter average, with overseas capital accounting for £3.6 billion. Inflows from the US moderated significantly following a record 2025, with sterling's appreciation against the dollar identified as a factor potentially reducing the relative attractiveness of UK assets.
Despite the subdued overall figures, offices attracted £2.9 billion of investment — around 30% of total volumes — concentrated in London and select major regional cities. Industrial recorded its weakest quarterly performance in nearly six years, while retail remained subdued.
The weak opening to 2026 follows a strong 2025, when overseas inflows rose 33% year-on-year to £27.2 billion — the fourth strongest year on record — representing a record 56% share of total UK commercial property investment.
The report showed that the US remained the dominant source, with investors deploying £18.2 billion, boosted by large-scale healthcare transactions including Welltower's acquisitions of care home portfolios from Barchester Healthcare and HC-One. Build-to-rent investment reached a record £5.6 billion, while office investment recovered modestly as sentiment towards prime assets improved.
Domestic and foreign investment into UK commercial real estate 
Source: CoStar Group
"The UK continues to attract substantial international capital into real estate, reflecting the sector's long-term strengths and the country's reputation as a stable and transparent place to invest," said Melanie Leech (pictured right), interim chief executive of Real Estate:UK. "The strong performance in 2025 demonstrated continued confidence in UK real estate, particularly in sectors such as healthcare, rental housing and operational assets.
"However, the significantly weaker start to 2026 highlights how sensitive international capital flows are to changes in the wider economic and geopolitical environment. Sterling's appreciation against the dollar may also be eroding some of the pricing advantage that helped drive exceptionally strong US investment into UK real estate during 2025.
"At the same time, investors continue to raise concerns about the challenges of deploying capital into new development and upgrading existing assets in the UK. Elevated construction costs, regulatory delays and policy uncertainty are all affecting development viability and investor confidence at a time when attracting long-term capital into housing, infrastructure and commercial real estate is critical to supporting economic growth."
Notwithstanding the uncertainty that weighed on activity in early 2026, Grant Lonsdale (pictured right), senior director of market analytics at CoStar Group, said investor appetite for UK real estate had not disappeared.
"We are beginning to see signs of a rotation back towards prime office assets, particularly in Central London and major regional cities, where constrained supply of high-quality Grade A space is supporting occupier demand and investor interest," Lonsdale noted. "More broadly, the quarter reinforced an ongoing flight to quality across real estate markets, with capital remaining focused on the best-performing sectors and assets."
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