| In central London, twice as many businesses upsized than downsized last year, with one-third of London lettings coming from new entrants | Premium pricing, limited development supply and consistent performance makes Edinburgh one of the UK’s most attractive hotel markets | According to research, US investors have acquired close to £50bn of UK commercial assets since 2021 |
Office market outlook brightens as demand outpaces supply
The UK office market is recovering, with new data pointing to a steady increase in demand.
Rightmove’s Commercial Insights Tracker reported interest in office space rose 11% in Q4 2024 compared to Q4 2023, while supply grew by just 2%. The investment side of the market saw even greater momentum, with demand up 57% against a 1% rise in available stock.
The findings reflect positive industry forecasts for the commercial property market. CBRE confirmed companies that planned to reduce their office footprint have done so and many are actively expanding again. In central London, twice as many businesses upsized than downsized last year, with one-third of London lettings coming from new entrants. Consultancy Hollis predicts a 10% rise in office employment outside London over the next decade, creating demand for an additional 50 million sq. ft of office space across the UK.
Investor appetite for UK healthcare rises amid stable returns and social need
The sector is set for an investment surge, with 93% of investors planning to boost their allocations, according to CBRE.
Most investors polled in CBRE’s Healthcare Sentiment Survey expect transaction volumes to rise in 2025, with specialist and elderly care homes attracting the most capital. Healthcare properties linked to age-related care have shown resilience during economic downturns and offer dependable income over time. Healthcare operators are also upbeat, with 62% planning to expand in the next five years. While rising staff costs and new tax obligations pose challenges, staffing pressures have eased, with vacancy rates at just 4.3%.
While high construction costs and sluggish planning approvals are still widespread concerns, nearly half of developers plan to take on new projects in 2025. Demand is strongest in the North West, with growing interest in Scotland and Northern Ireland.
Scotland stands out as UK hotel investment hotspot
Scotland leads the UK hotel market, with Edinburgh top of Colliers’ 2025 Hotel Market Index.
Edinburgh hotels recorded an 85% occupancy rate last year, alongside a 10% rise in average daily rates and a 13% uplift in revenue per available room. According to Colliers, premium pricing, limited development supply and consistent performance makes Edinburgh one of the UK’s most attractive hotel markets. Glasgow climbed four places in the rankings, and revenue-per-available-room (RevPAR) rose by nearly 9% in 2024, supported by a busy events schedule, corporate travel and relatively low build costs.
Beyond the capital, Inverness is a rising star, with demand fuelled by experiential tourism and access to the Highlands. A 10% rise in RevPAR and limited competition in new development has sparked interest in boutique and luxury offerings. Together, these three cities demonstrate Scotland’s strength as a hotel investment destination.
Retail real estate set for strong year as investment demand rises
London remains the top destination for global capital, with hotels and mixed-use portfolios dominating deal activity. West End offices in particular showed signs of renewed interest. However, the South East continues to attract strong interest, and the North West and West Midlands have been attracting growing volumes of capital, particularly in the build-to-rent, logistics and student accommodation sectors.
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All details are correct at the time of writing (16 April 2025)
