Thursday 15 May 2025 10:49 am

Central London offices ‘top pick’ for UBS real estate analysts

British Land and other REITs are favoured due to their central London office exposure.

London office real estate investment trusts (REITs) like British Land are the “top pick” for UBS analysts, as interest in the capital has surged since the start of the year.

As property investors seek to move away from the US to avoid the uncertainty created by president Donald Trump, the UK has been one of the key beneficiaries.

REITs that focus on central London offices, such as Great Portland Estates, Gladstone Land, and British Land, have all outperformed the European Real Estate Association’s index by three to four per cent since the start of April.

“On the direct real estate side, we’ve observed an increase in interest for London office assets since the start of 2025, particularly from US capital looking for a cyclical opportunity,” UBS analyst Zachary Gauge wrote in a research note.

As the supply crunch facing prime London offices continues to grow, and further evidence of strong prime rental growth emerges, Gauge said the capital was being viewed as a more attractive opportunity.

The UBS analyst also credited the increasing interest for British real estate investing to “a warming of sentiment towards the UK on the back of the symbolic, if not material, trade deals”.

British Land’s London offices

British Land, which is due to publish its full-year results next week, is expected to have the most upside to its consensus results among any of the REITs.

“This ultimately stems from the continued strong performance we’ve seen from the retail warehouse sector, and our expectation that their City office exposure will likely produce a strong beat on the underlying market benchmark numbers,” said Gauge.

“With the company delivering 2.5 per cent estimated rental value growth in the first half, we’re expecting growth for the full year to be at the top end if not above their three to five per cent guidance.”

The trust’s vacancy rate is likely to be a focus of the results, with a vacancy rate of 13.3 per cent in the West End and 23.6 per cent in the City, according to its half-year results.

UBS analysis also found that British Land was trading at the cheapest level of any real estate trust focused on the City on the market, based on its 10-year history relative to the sector.