The UK property market is facing a paradox that’s proving difficult to shake: there’s capital ready to move, but the market isn’t moving with it.
Cash is ready, confidence is not
Institutional investors, private lenders, and funds all have dry powder — money raised and ready for deployment. By most measures, there should be momentum. But instead, we’re seeing hesitation.
The issue isn’t capital supply. It’s confidence in the exit. In today’s market, investors are wary of where they’ll end up, even if they’re eager to get started.
City centres: safe but slim
Assets in city centres — particularly in London, Manchester and Birmingham — remain the perceived “safe bet”. These markets offer stronger demand fundamentals, better rental covenants, and clearer exit routes, making them feel less risky.
But that relative safety comes at a cost. Years of capital flooding into core urban areas have compressed yields. Developers and investors chasing city-centre placements are now facing ever-thinner margins. With build costs still volatile, that equation is becoming increasingly hard to solve.
Periphery: higher risk, higher friction
On paper, suburban and regional markets offer better returns. But access to finance in these areas is tightening.
Lenders are pulling back, citing location risk, weak comparables, and a lack of exit clarity. Fragile planning positions also deter support. Non-core opportunities are either excluded from senior debt strategies altogether or offered on terms so restrictive they become unworkable.
Lending is slowing — not from lack of money, but lack of comfort
Lending houses remain cautious. Underwriting is conservative. Exit assumptions are being stress-tested more aggressively. Appetite for speculative plays is weak unless the fundamentals are watertight.
That’s creating a strange inertia: liquidity exists, but it’s not lining up with where the best opportunities might lie.
What happens next?
Unless build costs fall or yields decompress — both unlikely in the short term — this market standoff will likely continue. In the meantime, forward-funding deals, JV structures and closer lender-developer partnerships may emerge as viable paths forward. These could help close the gap between available capital and deliverable schemes.
But for now, our broker team continues to navigate a market caught between readiness and reluctance.
Thomas Pritchard is a director of Charter HCP
