Optimism for UK Real Estate – but Process is Stifling Investment

There is a measured but cautious optimism in the UK real estate investment space, with government, pension fund and other institutional investment continuing to have confidence in the sector.

Members of JTC’s Real Estate teams continually communicate with industry participants who cite complexity in the planning system and regulatory challenges as factors that hamper the ability to deliver in a timely and efficient manner highlighting the importance of streamlining and innovation if the sector is to realise its potential over the remainder of the year and into 2026. Particularly if the industry is to contribute, even in a small way, to supporting the UK aspirations for delivering new homes

If a straw poll at the UK Real Estate and Infrastructure Investment Forum (UKREiiF) is anything to go by, the UK real estate sector is in a relatively good place – around 70% of attendees at that event said they were positive about the prospects for the sector this year.

This optimism coincided with one of Leeds’ sunnier weeks of the year, but the sentiment is reflected at other events and through conversations with real estate stakeholders over the year.

“The UK continues to demonstrate the dynamism needed to attract high-quality domestic and foreign capital, across a broad and diverse range of real estate and infrastructure assets, including across the regions beyond London and the major cities,” says Group Head of Real Estate, Simon Todd.

“The industry continues to face challenges from the current geopolitical climate and the post Brexit landscape, with key factors including disrupted supply chains, tariffs, currency fluctuations, and a shortage of skilled construction labour.

While volatility can create opportunities, many of the investors I spoke to would welcome a period of stability,” he continues. The positivity in the UK should hopefully be maintained in light of recent announcements from the UK Government, including the Chancellor’s Spending Review in June which focused on long-term growth for the UK economy, including commitments made around housing and transport.

That was followed up more recently by a more comprehensive commitment by the Chancellor to a ten-year infrastructure investment plan which could see some £725bn pumped into the sector, bringing together public and private investment, targeting the UK’s aging road, bridge and tunnel network.

“With investors typically adopting a long-term time horizon, this should provide some further reassurance in the UK as an investment destination,” adds David Moffat, Director – Corporate Services.

“Overall, there are some very good reasons that the UK remains attractive to , offering good capital growth opportunities across diverse asset classes.”

The alternatives sector continues to present significant opportunities. Investors cite data centres and logistics assets as strong options, while student accommodation, private rented sector (PRS) and build-to-rent also remain highly appealing on the residential side.

Barriers

Despite this positivity, though, there are a number of issues creating barriers in the sector.

“A chief issue continues to be the planning system’s complexity, and the costs associated with that,” explains Will Turner, Director – Fund and Corporate Services. “Regulatory challenges, planning processes and approvals are creating delays in the property and development supply chain, slowing capital down and creating bottlenecks.”

An example is the Building Safety Act, which has come into play, for very good reasons, off the back of the Grenfell Tower disaster to ensure safety standards on high rise residential developments. While the regulation itself is sound, the processes around it is difficult to navigate, expensive, and time consuming – undoubtedly impacting and slowing down investment and the delivery of projects.

“The planning system is critical to unlocking the Government’s construction targets. Streamlining and more efficient processes in this area will be important if the UK is to make the most of the appeal it has worked so hard to earn,” adds Will.

Capitalise

Against this backdrop, the focus for the real estate industry should be on what it can do to help provide greater efficiencies, iron out complexity and improve investor experience, so that it can capitalise on investor interest.

From JTC’s perspective, that means providing insight, guidance and solutions to help support global capital and investment flows.

“It’s why JTC has such a focus on innovation, to support the shifting nature of the market and changing investor behaviours,” says Sam Dewhurst, Associate Director – Corporate Services.

“Investors are responding to the environment around them and exploring new structures and solutions – in the context of the UK, the recently launched Reserved Investor Fund is a case in point and an area where we’ve been developing our capability.”

Having specialist expertise across asset classes, as well as global expertise through JTC’s network in all major real estate investment jurisdictions, is particularly helpful too, enabling investors to navigate both UK and international regulatory and market complexity, enabling greater and swifter access to market opportunities.

PropTech continues to be a key area of rapid development across the industry too, in areas such as data management as well as sustainability and ESG reporting, helping to inform better decision making and drive greater efficiencies.

“Looking ahead, what investors need is clarity and reassurance, both from policy makers and industry, that their capital can be deployed quickly and efficiently,” concludes Simon.

“The UK market has an opportunity to move beyond the rhetoric to make the most of the investment that is clearly out there – and as an industry we must do all we can to maintain a streamlined, efficient environment that can deliver a smooth, hassle-free investor experience. If we can do that, then the outlook for the coming months looks very positive indeed.”