TL;DR
- UK commercial property investment edged up to £57bn in 2025 from £56bn in 2024, with overseas capital a record 56% of activity at £27.2bn, £18.2bn of it from the US (CoStar & Real Estate:UK).
- The first quarter of 2026 fell to £9.7bn, nearly 40% below the five-year first-quarter average, and the second quarter came in between £8.3bn and £10.0bn depending on the house counting.
- The market is top heavy: in Q2, 25 deals above £100m made up 62% of volume (Lambert Smith Hampton), the kind of concentration that rewards owners with the data to move fast.
Proptech sells into a real estate market, and the state of that market decides how much appetite owners and developers have for new technology. In the UK, the backdrop to PropTech Connect Europe 2026 is stability at the top line for 2025 and a visible cooling underneath it this year.
A market that held its ground in 2025
UK commercial property investment exceeded £57bn in 2025, edging up from £56bn in 2024 (CoStar & Real Estate:UK, May 2026). The more striking number is where the money came from. Overseas inflows rose 33% year on year to £27.2bn, a record 56% of all activity and 22% above the long-term average, making 2025 the fourth strongest year on record for cross-border investment. The US alone deployed a record £18.2bn, 73% of the top ten investing countries' combined total, much of it through Welltower's £6bn-plus acquisition of more than 550 care homes. Foreign capital now makes up the majority of the market, and the report's authors warn that leaning on one source of it is a risk in its own right.
That international pull is corroborated elsewhere. In EY's 2025 UK Attractiveness Survey the UK kept second place for foreign direct investment in Europe, behind France, and Knight Frank's second-quarter review still ranks the UK as the number one destination for cross-border real estate capital in Europe and second globally.
Sector rotation
The averages hide a rotation between asset classes (CoStar & Real Estate:UK):
- Offices climbed to £11bn in 2025, 6% above the previous two years, though far below the £20bn-plus totals of 2021 and 2022.
- Healthcare drew nearly £10bn, much of it from US institutions treating an ageing population as a defensive, inflation-linked play.
- Build-to-rent hit a record £5.6bn, while student accommodation cooled to a six-year low of £4.1bn.
- Data centres and life sciences grew, with London holding more than 30% of UK data centre stock and lab leasing reaching a record 960,000 sq ft.
The 2026 cooldown
First-quarter investment fell to £9.7bn, less than half the exceptionally strong final quarter of 2025 and nearly 40% below the five-year first-quarter average (CoStar). Offices led at £2.9bn, 30% of the total, but overseas capital shrank to £3.6bn and US inflows eased to around £1.5bn as sterling's rise against the dollar eroded the pricing advantage of 2025.
The second quarter did not recover. Knight Frank puts UK volumes at £8.3bn, down on both the previous quarter and a year earlier. Lambert Smith Hampton counts £10.0bn on its wider definition, 7% below Q1 and 17% below the five-year quarterly average, with transaction numbers down 20%. LSH's detail is the telling part:
- 25 deals above £100m made up 62% of Q2 volume
- overseas buyers put in £5.2bn, but net purchasing fell to £648m after heavy disposals
- living took £4.0bn, including a record £2.0bn of build-to-rent
The read-through for technology buyers
A market this dependent on cross-border capital, this concentrated in large lots and this exposed to rate and cost pressure is exactly where efficiency, transparency and data tools earn their keep. Owners still transacting are doing so in bigger tickets, which puts a premium on underwriting speed and portfolio-level insight. The backdrop is not booming, and that is precisely why the adoption conversation in London matters this month. Where UK proptech money goes traces the venture side of the same story, and London's proptech inflection sets out why the capital is concentrating.
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- UK CRE investment above £57bn in 2025 vs £56bn in 2024; overseas £27.2bn, up 33%, record 56% of activity, 22% above long-term average, fourth strongest year on record; US £18.2bn, 73% of top-ten countries' total; Welltower £6bn-plus, 550+ care homes; offices £11bn (+6%, vs £20bn-plus in 2021-22); healthcare nearly £10bn; BTR record £5.6bn; PBSA six-year low £4.1bn; London >30% of UK data centre stock; lab leasing ~960,000 sq ft; EY 2025 UK Attractiveness Survey second for FDI in Europe behind France; Q1 2026 £9.7bn, less than half Q4 2025, nearly 40% below five-year Q1 average; offices £2.9bn, 30%; overseas £3.6bn; US around £1.5bn; report dated May 2026 (Real Estate:UK & CoStar, "Who invests in UK property 2025/6?"): https://realestateuk.org/media/n01dtxc5/who-invests-in-uk-real-estate-2026_costar_and_realestateuk.pdf
- CoStar Q1 2026 release, Grant Lonsdale on £9.7bn and offices £2.9bn: https://www.businesswire.com/news/home/20260506436227/en/CoStar-Data-Shows-Offices-Leading-UK-Investment-in-Q1-2026
- Sterling's appreciation eroding the US pricing advantage (Melanie Leech, Real Estate:UK): https://www.propertyweek.com/finance/uk-commercial-property-market-hit-by-40-drop-in-overseas-investment
- Q2 2026 UK CRE investment £8.3bn, down on Q1 and on Q2 2025; UK number one for cross-border real estate capital in Europe and second globally: https://www.knightfrank.co.uk/research/article/2026/8/real-estate-navigator-q2-2026-resilience-amid-relentless-uncertainty
- Q2 2026 £10.0bn, 7% below Q1, 17% below five-year quarterly average, transactions down 20%; 25 £100m-plus deals = 62% of volume; overseas £5.2bn, net £648m; living £4.0bn, BTR record £2.0bn: https://www.lsh.co.uk/explore/research-and-views/research/2026/july/q2-investment-top-heavy-amid-geopolitical-challenges
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