What do Singapore-based investors think of UK property as an asset class? The author of this article considers what’s going on.

This article explores how Singapore investors are recalibrating their exposure to the UK’s commercial real estate market as global capital flows shift in 2025. The commentary looks at yields, cross-border capital trends, and sectoral repositioning, framed from the vantage point of Singapore’s globally mobile private capital. 

The author is Dr Victor Chukwuemeka is an economist, trader, researcher and teacher (more on the author below). 

The editors are pleased to share this material; the usual editorial disclaimers apply to views of guest writers. To comment, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

As we come to the end of 2025, the global real estate landscape is entering a new equilibrium. After several years marked by inflation shocks, geopolitical friction and the steepest interest rate cycle in a generation, signs of stability are finally emerging. The Bank of England seems to have completed its tightening campaign amid moderating inflation, while the pound sterling has steadied after two years of volatility. Global capital, long on the sidelines, is beginning to re-engage with income-producing assets. Against this backdrop, the UK’s commercial real estate (CRE) market is regaining attention. For Singapore investors, disciplined, globally active and liquidity-sensitive, the question is not whether to invest, but how to reposition strategically for the next cycle.

After two years of repricing, the UK market has started to establish more solid ground. CBRE’s June 2025 Monthly Index reported that capital values rose by around 1.4 per cent year-on-year in the first half of the year, while rental values increased by 1.6 per cent. Savills Research noted that total investment volumes reached roughly £21.9 billion ($28.8 billion) in the first six months of 2025, with £10 billion transacting in the second quarter alone. 

Although that remains below the long-term average, the data signals improving sentiment and renewed liquidity. Prime yields have held broadly steady at about 5.9 per cent, suggesting the correction of 2023 to 2024 may have largely run its course.

Industrial and logistics assets continued to lead the market, accounting for roughly a 25 per cent of the total investment market. These sectors remain underpinned by strong demand from e-commerce and supply chain operators. Meanwhile, selective recovery in offices and living sectors, including student accommodation and build-to-rent, reflects investors’ growing focus on durable, income-generating assets. This market appears to be on the road to recovery and is settling into a phase where re-entry is carried out cautiously.

For Singapore investors, this shift is strategically significant. The stabilisation of UK interest rates and improved clarity around monetary policy have reduced one of the major deterrents of recent years. Uncertainty in financing costs. A steadier sterling also enhances visibility for cross-border returns, particularly when benchmarked against the Singapore dollar. 

This appears to be the platform for better risk-adjustment for overseas allocations, especially for investors seeking yield diversification as Asian office and logistics markets become more fully priced.

Foreign capital remains a defining force in the UK property market. Colliers estimates that international investors accounted for approximately 58 per cent of all transactions in early 2025, underscoring the country’s enduring appeal as an open, transparent and legally secure market. These are qualities that resonate strongly with Singaporean institutions, family offices and private capital platforms.

Yet the composition of opportunity is changing. Since Covid-19, strategies have changed to sectors that combine stable cash flows with structural growth drivers. Logistics and last-mile warehousing remain staples, but investors are also turning to “living” and alternative sectors such as healthcare, data centres and purpose-built rental housing. There is rising interest in value-add strategies, especially adaptive reuse, converting underperforming retail or office properties into mixed-use or residential formats.  

For Singaporean capital, such diversification marks an evolution rather than a departure. Local REITs and private funds, once concentrated in core, income-stable assets, are increasingly constructing hybrid portfolios, blending long-term holds with opportunistic acquisitions positioned for yield compression or operational uplift. The resulting investment style is more agile and hands-on, reflecting both growing risk sophistication and the need to compete in a crowded global capital environment.

Looking ahead to 2026 to 2028, most forecasts target decreasing borrowing costs which lean towards better returns. CoStar Analytics projects that total returns in UK commercial real estate could approach 11 per cent for 2025, where yields should level off and moderate rental growth established. That figure may not be uniform across all sectors, but it illustrates a recovering performance base. With reduced interest rates, leveraging equity and capital should be the way ahead.

For Singapore investors, the key advantage lies in mobility. Operating outside the rigid mandates of large institutional funds allows them to act nimbly, carefully adjust their funding with more stable market pricing. Timing will matter. Early entry may carry residual downside risk, while waiting too long risks missing the first phase of yield compression. The most compelling opportunities may cluster around logistics and living sectors.

However, selectivity remains critical. Supply-side constraints, particularly in construction and refurbishment, could sustain pricing pressure for prime-grade assets. The performance gap between high-quality, energy-efficient stock and older secondary properties continues to widen as tenants prioritise sustainability and compliance with net-zero standards. ESG credentials are very important, and assets without them risk obsolescence and higher capex requirements. Managing currency fluctuations is in itself very important and, although sterling has been steady recently, it remains exposed to political cycles and global volatility, meaning that unhedged returns can vary widely.

Despite these headwinds, the overall direction is one of renewed engagement rather than retreat. The UK market is entering a more balanced phase, where risk and reward are once again measurable. For Singapore investors, this presents an opportunity to rebuild exposure under improved terms.

In essence, UK commercial real estate is no longer a distant diversification play. It is a strategic market entering its next chapter. Those who look beyond headline yields to understand the interplay of policy, geography and structural change will be best placed to capture the next wave of value. Success will belong to investors who combine patience with precision – using today’s market dislocation not as a deterrent, but as a starting point for tomorrow’s growth.

About the author
Dr Victor Chukwuemeka has more than more than 30 years of experience across financial markets, government, and academia. He is the founder of Edgewise CRE, a research platform which translates global economic and real estate trends into actionable insight for investors.