UK commercial real estate investment volumes increased from £10bn in Q2 to around £11bn in Q3, ahead of the same quarter in 2025, but 13% below the five-year quarterly average, according to new research from Colliers.
UK commercial real estate total returns are forecast to reach 4.4% in 2026 before strengthening to 6.3% in 2027 and 8.2% in 2028, with total returns forecast to average 7% per annum over the five years to 2030.
According to Colliers’ latest Q3 UK Real Estate Investment Forecasts report, the 2026 total return forecast has been revised down from 5%, reflecting higher gilt yields and increased uncertainty.
The firm expects all-property capital values to decline by 0.3% in 2026 before returning to growth of 1.6% in 2027, with limited property yield movement expected over the next few years.
The retail sector is expected to lead performance over the next five years, with total returns forecast to average 8.5% per annum between 2026 and 2030, compared with 7% for all property. Shopping centres are forecast to generate the strongest returns at more than 10% per annum, while retail warehouses are expected to return around 8.9%.
Oliver Kolodseike, head of research and strategic insights at Colliers, said: “Higher gilt yields and borrowing costs continue to create a challenging investment environment, limiting the potential for significant capital growth in the near term. However, occupational fundamentals remain resilient across parts of the market and we expect returns to strengthen from 2027.
“With limited scope for yield compression, income and rental growth will be increasingly important drivers of performance. Retail continues to stand out, while demand for high-quality office and industrial space is supporting rental growth in those parts of the market.”
