National investment overview

The uptick in investment activity experienced at the end of 2024 failed to continue into 2025 with investment volumes reaching £227 million in the first quarter. This is 54% down on Q4 2024 and 62% below the 10-year quarterly average. More encouragingly however, the number of transactions recorded gained momentum with 33 recorded, up on 21 seen per quarter on average over the last two years.

Just one transaction over £25m completed; Pontegadea’s £75m purchase of Capital Square, 62 Morrison Street, Edinburgh. The transaction marks the Spanish investors second prime office transaction in the Scottish capital in under a year, highlighting the growing preference for the best buildings, in central locations with excellent sustainability credentials.

As a result, overseas investors have boosted their share of investment activity over the last 12 months (Apr ’24 – Mar ’25) accounting for 41%, up on the 34% share over the previous 12 month period (Apr ’23 – Mar ’24). Conversely, UK Institutions have decreased their share of investment from 18% to 9% over the two 12 month periods.

Whilst geopolitical and economic uncertainty remains elevated, the relative value offered by regional offices compared with other asset classes, together with a robust occupier market and strong rental growth prospects, boosted by a lack of supply, underpin the case for increased confidence in the UK office sector in 2025.

With UK inflation slowing for a second consecutive month in March to 2.6% and pressure mounting on the BOE to support economic growth, the likelihood of base rate cuts sooner have increased. This spells good news for investors waiting on the sidelines.