"Despite numerous internal and external shocks, the UK property sector has demonstrated remarkable resilience over the past few years"
- James Sproule - Handelsbanken
More than half of the UK’s large portfolio property investors intend to expand their holdings in 2025, despite ongoing economic and geopolitical uncertainty. According to Handelsbanken’s fourth annual Property Investor Report, investors remain cautiously optimistic, with many seeking growth through geographic and sectoral diversification.
The survey, which reflects the views of large-scale investors and property professionals, found that 54% plan to increase portfolio size in the coming year. Among them, 73% aim to diversify across different regions, and 75% across asset classes. These shifts suggest a deliberate approach to long-term growth in a market still adjusting to recent volatility.
London has re-emerged as the most attractive investment location, cited by 46% of respondents. This marks a reversal from 2024, when the capital dropped to fifth place. The East of England remains close behind at 42%, supported by strong yields and local economic performance, particularly in areas such as Cambridge.
Commercial sector
Commercial property has now overtaken residential as the preferred asset class, with 46% of investors predicting substantial demand growth in the sector, compared with 17% for residential. Within commercial real estate, 52% plan to increase exposure to offices. At the same time, 30% expect to reduce their involvement, indicating a divided outlook that reflects ongoing uncertainty around post-pandemic working patterns. Retail is also drawing renewed interest as investors broaden their focus.
“The results of this year’s report show an industry that still has plenty of optimism and potential, even in the face of uncertainty, challenge, and change," explained Chris Teasdale, chief branch officer at Handelsbanken. "Whatever the wider economic backdrop, the good news is that this is still a sector with plenty of appetite for growth.”
The report also revealed a shift in expectations around portfolio values. While 80% of respondents anticipate an increase, just 14% expect significant value growth in 2025. This marks a decline from 31% in 2024 and 39% in 2023, suggesting a more measured outlook in the face of global and domestic challenges.
Sustainability continues to play a growing role in shaping investor priorities. The report found that 77% of tenant conversations now include requests for environmentally friendly features such as solar panels or heat pumps. A large majority of investors (92%) believe tenants are willing to pay a premium for more sustainable properties. Views on regulatory reforms related to energy performance are largely neutral or positive, with 36% seeing them as a benefit and 56% reporting no impact.
Teasdale added, “I was encouraged to see investors believe that tenants recognise the value of a property that benefits from being more sustainable and are willing to pay a higher rent as a result.”
Looking at legislative developments, including the Renters’ Rights Bill and planned EPC changes, the report found that responses to the Renters’ Rights Bill were mixed: 36% said it made them more positive about the sector, 48% felt neutral, and 12% reported a negative view.
“Despite numerous internal and external shocks, the UK property sector has demonstrated remarkable resilience over the past few years," comments Handelsbanken's UK chief economist James Sproule. "Property continues to offer robust investment opportunities and relatively attractive, long-term returns.”
Gareth Williams, senior financial product owner, corporate lending at Handelsbanken, added, “The overall stability in market sentiment reflected in the report is welcome. However, we see our property investment customers taking a longer-term view across their portfolios, which positions them favourably to manage through these cycles.”
