London’s Future: Driving Growth Across Real Estate
Investors are attracted by London’s fundamentals
There are a number of reasons why capital decides to leave its domestic market – decisions led by regulatory or political forces, overallocation, a currency play or a need to diversify, as examples
London is a major destination for inbound investment across different strands of capital deployment, one of which is real estate investment. London is a dependable choice for investors given its strong fundamentals including the English language and law, international connectivity, a business‑friendly time zone, and a diverse and transparent market. These attributes have attracted overseas investment into London real estate for decades.
London’s resilience in times of uncertainty adds to its allure, as demonstrated in the table below which looks at global cross‑regional investment totals between North America, Europe, and Asia.
Liquidity has been demonstrated over the last three years (to H1 2025), as during strong and weak markets, London received more cross‑regional investment into real estate than any other European city.
We expect the underlying fundamentals in London to uphold its position as Europe’s most liquid investment market, with further scope for London’s appeal to increase as emerging and maturing sectors evolve.
Cross-regional Investment
Investors are affirming their interest in the London market
London’s appeal as a real estate investment market has seen it named the most attractive city for cross‑border investment in our European Investor Intentions survey for several consecutive years.
Capital has been actively deployed in line with positive sentiment; in the trailing 12 months to Q3 2025, London was the second leading global city by cross‑border investment volumes. Since 2008, there have been only four global cities competing for first place, – London, Paris, New York, and Tokyo.
Across the 71 quarters from Q1 2008 to Q3 2025, London has ranked number one, more often than any other city analysed. There have only been six occasions where the trailing 12 months figures show a city other than London ranked first. As a result, London presents an average ranking of first place across the Q1 2008–Q3 2025 period.
Figure 5: Top 20 global cities by cross-border investment activity, trailing 12-months ending Q3 2025 (US$ millions)
Worldwide investment across a range of asset types
Investment across all Central London property has averaged £18.1bn per year in the 10 years to Q3 2025, split across a diverse range of asset types. During the same period, London volumes represented almost one third (32%) of the total UK volumes.
The investor base is also diverse; since 2016, international buyers (from over 50 countries) have completed on 62% of all property sales. The office and retail sectors have proved particularly attractive to overseas purchasers, where they accounted for 69% and 65% of volumes respectively.
Figure 6: Real Estate Investment volumes into London by asset type
*Historic data to end of Q3 2025
Recent market activity has operated below trend levels across many cities due to higher interest rates, but there are now evident signs of market recovery. Overseas investors are returning to London and larger lot size transactions are completing more frequently. As a result, we expect a progressive year-on‑year increase in transaction volumes.
Figure 7: Real Estate Investment into London by purchaser region (all asset types)
London provides competitive forward-looking opportunities
Our property market forecasts show that London provides attractive risk‑adjusted returns and looks competitive relative to its peer global gateway cities such as Paris and New York.
Despite a higher required rate of return, investments into London (on a weighted‑average basis) are expected to provide a higher expected rate of return, sufficient to compensate for higher risk.
These are market averages and the outlook may differ for any individual deals which may look more or less attractive due to variation in properties, local markets, and sectors.
Figure 8: 10-years expected rate of return and required rate of return, weighted average (all sectors) by location
Note: Analyses 10-year unleveraged total returns across office, retail, industrial & logistics and living assets (weighted average)
**For more information on hurdle rates analysis, please contact CBRE Global Economics and Forecasting.
