30 October, 2025

Risks and Benefits of Investing in UK Commercial Real Estate

Certain groups of risks are always behind any type of investment. Despite the fact that property has been considered a reliable source of passive income for a long time, after the consequences of Brexit, changes in the tax system and the increase in stamp duty, residential real estate has partially lost its former advantages. Instead, 2021-2022 became the heyday of investments in commercial realty. Next, we will try to understand what prospects and risks exist for those who choose this type of real estate.

Commercial Real Estate — What is it?

Commercial facilities include all places that can be used for business: from offices to hotels, from retail outlets to entire shopping centers. Based on information from the British Property Federation, commercial properties account for more than 13% of all properties.

The main advantage of investments in buildings of this purpose is that the spectrum of directions and opportunities for launching projects is numerous, as are the forms of investment. The total profit of the real estate market for the year grew from 2% to 17%, and analysts from Schroders predict another 5%-7% growth in the near future. Despite the positive expectations from the market, investors should pay attention to factors that can affect earnings:

  1. Location of the Real Estate Object

The general infrastructure and development of the area can affect the cost of renting and selling the premises. On the one hand, if you have  a nice room in a bad area, but its development plan indicates restoration, then in the long run, you can get a good plus. And opposite, if you have a room in a prestigious area, but its condition does not correspond to the status, you will lose part of the money.

  1. Market Cycle

Commercial real estate and all related transactions respond to the general economic situation in the country. Falling or growing demand, shortage of supply and, excessive competition—all this impacts your profit. In this case, you need to monitor the situation and change the strategy for your own benefit.

  1. Niche Risks

Commercial real estate objects  in any way have their intended purpose and also depend on the processes that take place in the business environment. For example, during the pandemic, most companies began to refuse to rent offices, switching to remote working mode, it took a year and a half for the demand for office rentals to grow again.

How to Insure Yourself Against Risks?

  • Lawyers from Stephensons Solicitors LLP advise you to invest through funds that have different types of real estate in their portfolio. If your funds work in different sectors, niches and geographies, thus, with the profit from one block of shares, you can cover the losses of others.

  • Entrepreneur and founder of Imperium Investment Dmitry Leus advises paying attention to the market of online trade and logistics. According to him, these are the directions that are currently at the stage of development and need high-quality storage facilities for their business. Agreements with such companies will be profitable and long-term, and rent growth will reach 4-5% annually.


Claire James

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