CBRE reports UK real estate market resilience in H1 2026

CBRE’s 2026 UK Real Estate Market Outlook Mid‑Year Review finds the sector remained resilient despite a tougher economic and geopolitical backdrop. The firm now forecasts UK GDP growth of 0.9% for 2026, revised down from 1.2%, with inflation expected to peak around 3.5% in Q4, interest rates unchanged and unemployment set to rise modestly before easing in 2027.

Transaction volumes in the first half of 2026 totalled £23 billion, an 8% year‑on‑year decline, yet the UK attracted the most investment of any European market, with prime assets and core locations outperforming secondary stock. Investor appetite is strong across sectors, especially for infrastructure‑adjacent real estate, and moderating swap rates and attractive pricing are expected to support further acquisition and M&A activity.

Rental growth continued, with prime City rents reaching £95 per square foot (+12% YoY) and Mayfair/St James’s at £200 per square foot (+18%). AI‑related leasing in Central London amounted to 0.7 million sq ft. Regional markets benefited from growing defence and cybersecurity demand. The living sector faced challenges from higher financing and construction costs. Tasos Vezyridis, Head of European Research at CBRE, said: “The first half of 2026 has been shaped by geopolitical conflict, inflation concerns and a changing political landscape. Despite this, the occupational market is robust, debt markets remain liquid, and demand for prime assets continues to exceed supply in many sectors.”