Housing attracts largest proportion of real estate investment in Q3, says JLL

The residential market attracted the largest proportion of real estate investment for the third quarter running, according to new research, which also shows signs of recovery across the wider property market between April and June.

Research for the first half of this year, released today by property consultancy JLL, shows that the headline volume of UK real estate investment was £16.2bn over this period. This was in line with the figure for the first half of 2023 but 25% below the H1 average of £21.5bn.

And including mergers and acquisitions together with land and development investment, the overall volume increased 12% year-on-year to £22.6bn, JLL said.

This overall measure of UK real investment also saw an increase from £10.9bn in the first quarter of this year to £11.7bn in the second three-month period.

JLL’s figures also show that the living sector, covering all segments of the residential market including student accommodation and retirement homes, attracted the largest proportion of investment for the third quarter running.

JLL’s research showed the living sector attracted £4.8bn in investment, accounting for a 30% share of the real estate market. This compares to the living sector accounting for a 20% average share of real estate investment over the last ten years.

The £3.5bn of real estate investment attracted by central London far outstripped any other UK region although this amounted to a 46% fall on its ten-year average.

Greater London (£2.8bn), the south east (£2bn), the north west (£970m) and Scotland (£770m) made up the rest of the top five for investment volumes, though all saw dips on their respective ten year averages.

International investors accounted for 52% of total real estate investment with the Americas making up the most active regional group of buyers at 26%.

>>See also: Construction output down in Q2 despite second consecutive month of growth

Andrew Frost, head of capital markets at JLL, said: “It’s been a tale of mixed fortunes for the UK’s real estate sector so far this year. A mild recession at the tail end of 2023, combined with a turbulent political environment, has meant many investors have taken a ‘wait and see’ approach to deploying capital.

“But the sector is resilient, as it has shown time and time again. Stability in policy, proposed changes to the planning system to make building less burdensome and optimism that interest rates will continue to fall means many will be eyeing the second half of the year as an opportune time to invest. Those factors will, in turn, be crucial to driving the economic growth the new government is aiming for.”