UK real estate: pricing in uncertainty
Kieran Farrelly, Chief Investment Officer, Real Estate at Schroders Capital, joined a recent PERE roundtable to discuss where opportunities are emerging in UK real estate as investors navigate political uncertainty, inflation and higher borrowing costs.
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Political change, shifting capital flows, inflationary pressures and higher financing costs are reshaping the outlook for UK real estate. But amid a more challenging backdrop, repricing continues also creating opportunities for selective investors.
That was one of the key takeaways from Kieran Farrelly, Chief Investment Officer, Real Estate at Schroders Capital, speaking alongside fellow industry leaders at a recent a recent PERE UK Real Estate Roundtable, which sought to illuminate how investors can navigate a changing market – and where value can still be found.
Farrelly argued that while the UK faces a unique melting pot of pressures, underlying property prices have corrected significantly – to the lowest level in 25 years. This creates opportunities in assets with inflation-hedging characteristics such as index-linked leases, or operational sectors such as hotels and self-storage where pricing can adjust rapidly to cost pressures.
Key topics covered through the discussion included:
- Elevated political risk factors in the wake of the change in Prime Minister, including the potential for further action to curb rents: “I would be pricing that market as if there is rent control from now”
- Why international investors to the UK could seek further temporary risk premiums to insulate underwriting on potential transactions
- Growing regeneration opportunities in areas that have seen years of underinvestment: “There is a pervasive impact opportunity for investors willing to blend financial returns with other outcomes… through things like housing delivery and improving town centres”
- Potential polarisation in debt financing availability across UK real estate: “Depending on where you want to be on the risk-return spectrum, it gets a little tighter, but its at the margin”
- Why overseas core capital is still absent from the UK, but domestic core capital is becoming more active: “It is driven by quality. Whether it’s retail, office, industrial or housing, we’re seeing core money for the desired asset profile”
The roundtable was first published in the September 2026 edition of PERE. Read it in full here.
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