Overseas Investment in UK Offices Holds Firm as Wider Market Cools

Overseas investment in UK offices held firm this quarter. Almost everything else did not.

UK commercial property investment fell almost 40% below its five-year first-quarter average in early 2026. Total volumes reached £9.7 billion. Much of the coverage that followed read like a retreat.

Look past the headline number, and a different story sits underneath.

Offices were expected to struggle hardest as overseas capital pulled back. They did not.

Overseas investment in UK offices reached £2.9 billion in the quarter. Around 30% of all volumes. Much of it landed in London.

This is not a market in flight. It is capital being more selective about where it lands.

The wider slowdown, in context

Overseas capital made up £3.6 billion of the £9.7 billion total. The pullback was not evenly spread.

US buyers drove exceptionally strong investment into UK real estate through 2025. In early 2026, that pace moderated significantly.

Melanie Leech, interim chief executive of Real Estate:UK, points to currency as one driver. Sterling's appreciation against the dollar, she notes, may be eroding some of the pricing advantage that helped fuel that US activity last year.

A slower quarter is not always a vote of no confidence. Sometimes it is simply the maths changing.

Melanie frames the broader picture as one of continuity, not concern. The UK, as she puts it, continues to attract substantial international capital into real estate, reflecting the sector's long-term strengths and its reputation as a stable, transparent place to invest.

Why overseas investment in UK offices kept flowing

Offices did not just hold up. They stood out.

£2.9 billion landed in UK offices in the first quarter. Close to a third of all activity. London took most of it. French investors were particularly active, deploying more than £1 billion. Japanese investors were becoming more active too.

Industrial, by contrast, recorded its weakest quarterly performance in nearly six years.

This was never a uniformly quiet quarter. It was a selective one.

Overseas investment in UK offices was not an exception to the slowdown. It was where the slowdown chose not to happen.

What this says about confidence

Grant Lonsdale, senior director of market analytics at CoStar Group, puts it plainly:

"While uncertainty has clearly weighed on activity in early 2026, investor appetite for UK real estate has not disappeared. We are beginning to see signs of a rotation back towards prime office assets, particularly in Central London and major regional cities, where constrained supply of high-quality Grade A space is supporting occupier demand and investor interest.

More broadly, the quarter reinforced an ongoing flight to quality across real estate markets, with capital remaining focused on the best-performing sectors and assets."

But taken alongside the currency shift Melanie points to, and the continued flow of French and Japanese capital, it is a reasonable signal.

International investors still see something in UK offices, particularly in London, that they are not seeing elsewhere right now.

The Insider Take

This is genuinely interesting to me.

Rico Naylor - Founder of CRE Insider, MRICS

At CRE Insider, we want to explore more about where overseas investment is actually going, and why, rather than just reporting the headline numbers each quarter throws up. This piece marks the first in what I hope becomes an ongoing strand of coverage doing exactly that.

If you work in this space, an asset manager, an agent, an investor, or anyone with a view on where international capital is heading next, I would like to hear from you.

Get in touch. I would welcome the insight.

Sources

This piece draws on CoStar News's analysis of first-quarter 2026 UK investment data, written by Grant, senior director of market analytics at CoStar Group, including on-record comments from Melanie, interim chief executive of Real Estate:UK. Full coverage at costar.com.