According to the firm’s latest UK Investment Transactions (UKIT) report, £8.8bn worth of property changed hands in Q2, a 6% decrease from Q1’s already subdued total and the lowest recorded since Q2 2023.
LSH attributed the investment decline to an absence in large-scale deals.

Transactional activity was less impacted, as despite Q2 investment being 27% below the five-year quarterly average, the number of deals was only 9% below trend.

Meanwhile the living sector had a strong Q2 with volumes rising 21% quarter-on-quarter following increased PBSA activity, as well as hotel and healthcare segments. The area still sae a 16% decline from the five-year average.

BTR suffered a slow quarter, with a 10% investment decline, attributed to an absence of multi-family deals, despite single family rentals (SFR) accounting for £670m worth of deals.

However, there were signs of recovering investor confidence in the office sector with a £2.2bn volume, just moderately down from a Q1 five-year high, while offices accounted for 25% of overall investment in bothnQ1 and Q2.

According to LSH, retail was the most resilient of the main sectors in Q2 despite investment volume being down 11% from Q1 to £1.6bn, this was only a 7% decline from the five-year quarterly average.

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Total international investment amounted to £3.7bn in Q2, the lowest since Q3 2023, with inflows from the US representing 60% of this, compared with the five-year average of 49%, while investment from the Far East and Eutope were subdued.

Purchases made by UK institutions more than doubled from a record low in Q1 to £1.4bn, and included 42 separate deals, the highest in over three years.

Ezra Nahome, CEO at Lambert Smith Hampton, commented: “While Q2’s investment volume failed to improve upon Q1’s figure, it provided notes of resilience amid all of the global volatility and uncertainty prompted by the Trump-led administration.

“The UK market is on a fundamentally sound footing, reflected in ongoing rental growth across most sectors, while pricing in the UK remains relatively attractive in the wider global context.”

Ezra noted that while the direction of interest rates and finance costs was promising, the current economic climate could lead to investors sitting on their hands for longer.

“That said, there are significant opportunities for those bold enough to act, including in the BTR/SFR sectors, where housing supply shortages, strong rental growth prospects and government planning reforms all support an attractive case for investment.”