Prime yields for high street retail properties in the UK have increased since 2019. As of June 2025, yields were the highest for good secondary properties in markets such as Truro, Leamington Spa, Colchester, and the lowest on Bond Street in London. High street shops on Oxford Street in London had a prime yield of *** percent.

The industrial real estate sector and West End offices are forecasted to see the highest annualized rental growth in the UK between 2025 and 2029, followed by city offices. According to the forecast, industrial real estate and West End office space rents are expected to grow by *** percent per year in this period, while city office space rents are expected to increase by *** percent. When it comes to total commercial real estate returns in the UK, the industrial and shopping center sectors are forecast to outperform all other property types.

The price of prime office space in London differs significantly based on location. More central areas, including the West End, Marylebone and Knightsbridge, tend to have prime rents more than double the cost of areas on the outskirts. London office rents - most expensive in Europe When placing London alongside other major cities in Europe, the West End area of London had annual prime rents over 800 euros per year higher than Paris. In the United Kingdom (UK), average rental costs in the capital fair outweigh those of other areas. Outside of London, the major cities saw prime office rents ranging between 26 British pounds per square foot and 39 British pounds per square foot. Prime Yields Prime yields assess the return on investment expected for commercial real estate. In 2023, prime yields ifor office real estate stood between 3.75 and 7.5 percent. During the same year, office prime yields in several other areas in Europe saw far greater returns on investment.

Void periods constitute an important measure for the private rental markets, as they are one of the major reasons for the loss of expected rental income. They require careful planning and budgeting, to keep the time when the property is not achieving profit to the minimum and to make sure that all necessary expenses are still covered during the void period. As these differ across cities, towns and regions, researching of historical data, reflecting trends of void periods for the local area is seen as a good way to get an understanding of long-term trends.

Void periods for landlords in the UK

Data from the end of 2013 till quarter three of 2018 shows that void periods in the United Kingdom (UK) were shortest as of the first quarter of 2015, counting 2.4 weeks on average. They grew in length to 2.7 weeks in the last two quarters of 2016 and have stayed at that time length up until the fourth quarter of 2017. As of the third quarter of 2019, the average void period for landlords in the private rented sector amounted to 3 weeks, the highest average during the period under display.

Landlords and the rental market

In light of the coronavirus (covid-19) pandemic, approximately 3.4 percent of current and active landlords in the UK reported an increase in void periods and 16.4 percent that they experienced a combination of prolonged void periods and affected rental income. As of the fourth quarter of 2019, landlords already had low confidence in achieving their quarterly goals. The share of those who were planning to sell properties from their portfolio in the coming year was twice as high as the ones looking to buy.

In the first quarter of 2025, London West End - Bond Street was the most expensive location for prime high street rents in the UK, with prices reaching 2,500 British pounds per square foot. The West End was ranked ahead of London City, which came in third. In Manchester, the annual costs of rental per square foot of prime retail real estate amounted to 235 British pounds. Retail warehouses Retail warehouses typically range from 50,000 to hundreds of thousands of square feet. They are used for keeping and distributing inventory. Retail warehouses include loading docks, truck doors and large parking lots; also, they may contain a limited amount of office space. Prime retail warehouse properties belong to the wider category of industrial property, along with other real estate types, such as distribution buildings, showroom facilities, manufacturing buildings, cold storage facilities, telecom or data hosting centers, "flex" buildings denoting more than one industrial or commercial facility housed in the same building, and finally R&D buildings. Prime yields of high street retail across Europe Retail real estate prime yields in Europe were the lowest in Zurich, Switzerland, and the highest in Bucharest, Romania in 2025. As could be expected, larger cities in Europe tended to produce lower yields, due to the lower risk associated with these markets. Locations with lower yields tend to have steady occupancy rates and rental growth.

London is the most expensive city for office real estate in Europe. In 2023, the per square foot cost of office space in London was higher than in any other European city. In West End, a Grade A office cost about 90 British pounds per square foot in 2023. Prime offices were even more expensive, at 135 British pounds per square meter. Office yields Prime yields in Central London fluctuate depending on the district, but West End areas tend to have lower yields compared to other areas, such as Stratford or Canary Wharf. The prime office yield in Mayfair/St. James' in 2023 was the lowest among the major London office submarkets. In real estate, yields measure the potential return of a rental property and are calculated as the ratio of the property's rental income to the investment cost. Typically, prime office yields in London are lower than the rest of the UK, which is mostly due to the highly competitive market and high investment costs. Vacancy rates Despite the high office rental costs in England’s capital city, vacancy rates in many of London's main office markets were below seven percent in 2023. This is good news for the office sector, as during the coronavirus (COVID-19) pandemic, the share of vacant office space across all Central London districts spiked dramatically. Compared to other European cities, London was in the middle of the ranking, alongside Frankfurt and Lisbon.

In 2022, house price growth in the UK slowed, after a period of decade-long increase. Nevertheless, in June 2025, prices reached a new peak, with the average home costing ******* British pounds. This figure refers to all property types, including detached, semi-detached, terraced houses, and flats and maisonettes. Compared to other European countries, the UK had some of the highest house prices. How have UK house prices increased over the last 10 years? Property prices have risen dramatically over the past decade. According to the UK house price index, the average house price has grown by over ** percent since 2015. This price development has led to the gap between the cost of buying and renting a property to close. In 2023, buying a three-bedroom house in the UK was no longer more affordable than renting one. Consequently, Brits have become more likely to rent longer and push off making a house purchase until they have saved up enough for a down payment and achieved the financial stability required to make the step. What caused the recent fluctuations in house prices? House prices are affected by multiple factors, such as mortgage rates, supply, and demand on the market. For nearly a decade, the UK experienced uninterrupted house price growth as a result of strong demand and a chronic undersupply. Homebuyers who purchased a property at the peak of the housing boom in July 2022 paid ** percent more compared to what they would have paid a year before. Additionally, 2022 saw the most dramatic increase in mortgage rates in recent history. Between December 2021 and December 2022, the **-year fixed mortgage rate doubled, adding further strain to prospective homebuyers. As a result, the market cooled, leading to a correction in pricing.

Portugal, Canada, and the United States were the countries with the highest house price to income ratio in 2024. In all three countries, the index exceeded 130 index points, while the average for all OECD countries stood at 116.2 index points. The index measures the development of housing affordability and is calculated by dividing nominal house price by nominal disposable income per head, with 2015 set as a base year when the index amounted to 100. An index value of 120, for example, would mean that house price growth has outpaced income growth by 20 percent since 2015. How have house prices worldwide changed since the COVID-19 pandemic? House prices started to rise gradually after the global financial crisis (2007–2008), but this trend accelerated with the pandemic. The countries with advanced economies, which usually have mature housing markets, experienced stronger growth than countries with emerging economies. Real house price growth (accounting for inflation) peaked in 2022 and has since lost some of the gain. Although, many countries experienced a decline in house prices, the global house price index shows that property prices in 2023 were still substantially higher than before COVID-19. Renting vs. buying In the past, house prices have grown faster than rents. However, the home affordability has been declining notably, with a direct impact on rental prices. As people struggle to buy a property of their own, they often turn to rental accommodation. This has resulted in a growing demand for rental apartments and soaring rental prices.

In the presented European countries, the homeownership rate extended from 42.6 percent in Switzerland to as much as 95.9 percent in Albania. Countries with more mature rental markets, such as France, Germany, the UK, and Switzerland, tended to have a lower homeownership rate compared to the frontier countries, such as Lithuania or Slovakia. The share of house owners among the population of all 20 euro area countries stood at 64.5 percent in 2024. Average cost of housing Countries with lower homeownership rates tend to have higher house prices. In 2024, the average transaction price for a house was notably higher in Western and Northern Europe than in Eastern and Southern Europe. In Austria, one of the most expensive European countries to buy a new dwelling in, the average price was three times higher than in Greece. Looking at house price growth, however, the most expensive markets recorded slower house price growth compared to the mid-priced markets. Housing supply With population numbers rising across Europe, the need for affordable housing continues. In 2024, European countries completed between one and six housing units per 1,000 citizens, with Ireland, Poland, and Denmark responsible for heading the ranking. One of the major challenges for supplying the market with more affordable homes is the rising construction costs. In 2021 and 2022, housing construction costs escalated dramatically due to soaring inflation, which has had a significant effect on new supply.

Private companies were responsible for most of the new homes built in the United Kingdom (UK), amounting to ******* units in 2024. Housing completions in the UK decreased for three years in a row between 2007 and 2010. This was followed by several years of fluctuation and a gradual increase from 2013 to 2019. The number of homes completed in England remained relatively stable in 2022 and 2023, after reaching a low point in the second quarter of 2020 due to the restrictions implemented to prevent the spread of COVID-19. Construction starts and completions Comparing the number of starts and completions in London side-by-side shows that whenever there is a significant growth or fall in the number of projects started, that peak or valley tends to be reflected in the number of buildings completed a couple of years later. Nevertheless, disruptions, delays, and other obstacles may affect that correlation. Still, observing how many home construction projects started in the UK can provide some insight into the level of activity that construction companies may have in the near future. Given that the number of housing starts is forecast to fall in 2024, there might be slightly less work to be carried out the following year. Nevertheless, housing starts are expected to pick up again by 2025 and 2026. Housing associations in the UK Housing associations are not-for-profit organizations created to develop and rent homes for a lower price than in the private market. They have acquired certain relevance in the UK, although this type of organization also exists in other countries. On several occasions during the past decade, over a fifth of housing starts in London were developed by housing associations. Meanwhile, the number of new homes completed in Scotland by housing associations has increased a lot throughout the years, with several thousand units constructed every year during the past decades.