Investment across the UK, French and German commercial real estate markets has followed a similar pattern this year, with stubbornly flat figures boosted by increased interest from foreign investors. That pattern contrasts sharply with the US where inward foreign investment has fallen away.
CoStar News reviews the latest data from CoStar and leading brokers to compare activity.
The UK: Muted but lifted by foreign investment
Investment in UK commercial real estate has been flat for the past two quarters with overseas investment proving one of the main bright spots for activity.
According to Lambert Smith Hampton figures, there has been a fall in the second quarter with UK property investment volume at a two-year low. It was also the first quarter in five years with no transactions above £400 million. LSH says £8.8 billion of property assets changed hands, 6% down on the first quarter’s subdued total and the lowest since the second quarter of 2023. It flagged tariff concerns, the weak economic outlook and persistently high gilt yields as major factors.
Overseas investor interest has helped to lift the figures. According to CoStar data, overseas buyers spent £12.2 billion in the UK in the first half of 2025, a 64% share of total UK investment (£19.1 billion). This was on a par with the second half 2024 share (63%) and significantly above the first half of 2024 (53%).
North American investors were by far the biggest spenders once more, investing £8 billion in the first half of 2025, a 42% share of all investment. This puts them on track to exceed last year’s £13.6 billion, at the time a record 33% share of annual UK investment volumes.
Notable US deals included State Street’s acquisition of 100 New Bridge Street in London for £333 million, reflecting a 5% net initial yield, as revealed by CoStar News, and Omega Healthcare’s £241 million purchase of 46 care homes.
Considerably more foreign capital, in absolute terms, went into the UK than into the US. The UK's £12.2 billion of foreign capital in the first half of 2025, contrasted with the US's £7.3 billion, which amounted to a 2% share of all US investment, according to CoStar data. Foreign buyer investment in the US in the first half of 2025 was down from 11% in both H2 2024 and H1 2024, according to CoStar figures.
Investment into the US from overseas sources halved from £14.6 billion in the second half of 2024. The half-year average over the past five years is around £15 billion, according to CoStar.
It seems clear global investors have turned away from the US in the first half of 2025 amid concerns over the impact of tariffs and other US government policies.
European buyer activity in the UK was less impressive, with Norway's sovereign wealth fund taking up a large slice of the total via its acquisitions of stakes in major London estates in Covent Garden and Mayfair in particular.
German investment remains weak into the UK, in line with last year’s activity levels. There was £164 million spent in the first half versus £277 million in full-year 2024.
French SCPIs, effectively open-ended property funds, remained active and are expected to be acquisitive in the second half of tis year. Names like Iroko Zen, Remake and Corum are increasingly familiar in the UK with the reasons for their move to investing outside of their native market reviewed here. The £376 million spent in the first half is in line with the past five years’ worth of French buyer activity.
Large European investments in the UK included the Spanish Pontegadea buying Capital Square in Edinburgh for £75 million, while a joint venture between French investors Euragone Asset Management and Mata Capital bought the Corner Hotel in London for £42 million.
The figures show a reduction in activity from overseas investors in the second quarter. LSH said inflows to the UK from Asian investors hit a record low of £255 million in the second quarter, while purchasing from European investors halved from the first quarter to a five-quarter low of £916 million.
On the domestic front, institutions, quoted property companies and private propcos all remained net sellers of UK property in the second quarter, but there were some encouraging signs of improvement. Purchases made by UK institutions more than doubled from a record low in the first quarter to £1.4 billion, and included 42 separate deals, the highest in over three years.
France has a half-year of two halves
Total commercial property investment in France in the first half of 2025 reached €5.8 billion, up 30% on the first half of 2024, according to ImmoStat figures, but the picture for the second quarter was moribund, down 8% at a paltry €2.2 billion.
In a Business Immo report on the figures, Cushman & Wakefield described the the start of 2025 as a sudden return of geopolitical and macroeconomic uncertainty, crystallised around April's tariff shock. "These protectionist tensions have rekindled volatility on equity and bond markets, breaking the positive momentum of the real estate market," the broker said.
As with the UK, appetite from foreign investors has helped mitigate flagging transactional activity. International investors accounted for 59% of the volume invested in commercial real estate in France during the first half of 2025, according to a recent study by Savills.
This internationalisation is a "strong signal, which bodes well for the French market's ability to rebound further in terms of investment volumes", the firm said.
Unlike domestic investors, who prioritised offices and retail, international investors focused primarily on higher yielding assets and value-added strategies, according to Savills, citing the acquisition by Nuveen Real Estate and Global Student Accommodation of the YouFirst Campus student housing portfolio for €567 million.
In the same vein, industrial and logistics assets accounted for 35% of international capital directed towards the French market, once again mainly through core-plus and value-add strategies. Among the main logistics deals signed in France was EQT Real Estate's acquisition of the 148,000-square-metre Occident portfolio bought from Blackstone for €150 million.
According to Savills, North American and British investors saw their share of French investment volumes remain stable between H1 2024 and H1 2025, at 19% and 6% respectively. On the other hand, capital from Germany, and Asia-Pacific and the Middle East has become scarcer this year, accounting for only 1% and 2% respectively, compared with 4% and 6% in the same period last year.
In light of several transactions being finalised, international investors are expected to maintain their influence on the French market until the end of the year. Blackstone is expected to finalise the acquisition of the Paris Trocadéro business centre for €705 million shortly; Prologis recently entered into an exclusive agreement for the Nest logistics portfolio for more than €300 million; and JPMorgan Asset Management is expected to sign for the purchase of the France Campus student residence portfolio for approximately €190 million soon.
Germany: Foreign investor appetite ahead of pricing
Although the transaction volume on the German commercial investment market was lower than in the previous year at around €11 billion in the first half of the year, international investors were more active than before.
According to calculations by the major brokerage firms, they increased their share of total sales to roughly 45%, which is above the average for recent years. In the logistics, retail and hotel asset classes, more than half of the demand came from abroad.
According to CBRE, 70% of the €2.6 billion in logistics investments were cross-border, driven primarily by US investors. Prologis acquired a portfolio of seven logistics properties from Union Investment, including one near Nuremberg, for around €100 million, and one near Hanover with the market value approximately €60 million.
Among the larger deals were: the joint venture between Oxford Properties and AustralianSuper, which acquired the 10 properties in Germany managed by M7 for Oxford for around €100 million; Crossbay buying 45,000 square metres of logistics space and a development site near Berlin for around €60 million; and Greykite securing two properties near Frankfurt and Düsseldorf for around €60 million.
In terms of retail properties, international investors increased their holdings in Germany by more than €1 billion, according to JLL. Canadian asset manager Slate contributed to this, acquiring 45 local retail properties in four portfolio transactions for a total of €420 million at the beginning of the year. In addition, the French Frey Group acquired the B5 Outlet Center near Berlin for €230 million – this was the largest single deal by a foreign investor in the first half of the year.
According to figures from Colliers and CBRE, international investors accounted for around 60% of hotel purchases. This was particularly true for larger deals: six of the seven transactions bigger than €50 million were made by foreign capital. For example, Eagle Hills from Abu Dhabi acquired the Mandarin Oriental in Munich for €150 million, and Invesco bought the Intercity Hotel Berlin for €84 million from CA Immo.
In the office market and residential markets in Germany, international investors play a smaller role, but here too, according to BNP Paribas Real Estate, their market share increased to 21% and 38% respectively in the first half of the year. In Munich and Hamburg, Conren Land purchased two office buildings for a total of €150 million for a family office belonging to Spanish billionaire heiress Sandra Ortega Mera, and in Frankfurt, the “Atricom” was sold to Israeli investor Gold Tree for €65 million. In Munich, Italian company Generali secured an office project on Rosenheimer Straße from Art-Invest for €150 million.
Although no deals involving foreign participation exceeding €100 million were announced in the residential market, the Canadian pension fund PSP Investments has just announced that it will work with Goldman Sachs Alternatives to build a portfolio of up to 3,000 single-family homes in Germany. With an initial €550 million in equity, a total of €1.2 billion will be invested in what is a virtually untapped market segment that is comparatively less regulated. Goldman Sachs is also the sponsor behind a portfolio sale by Deutsche Reihenhaus to DW Effectum Residential, in which a total of 491 terrace houses were transferred.
In general, the main obstacle for foreign buyers in the German real estate market is pricing, at least outside core properties. Opportunistic and value-add money is waiting for prices to fall to the point where “returns are so good and entry prices are so low that you are sure to make your mark in two, three, or five years”, says Gerhard Lehner, head of Germany at Savills Investment Management. This worked well after the financial crisis, but it is difficult at the moment. “Not much is happening in Germany.” Investors are waiting for one or the other to come under pressure, but “many portfolio holders are not selling yet, apparently they don't have to sell yet”.