Buying Against the Tide, a new research report from Colliers reveals the evolving dynamics in the UK commercial real estate market, driven by contrasting domestic private and institutional investor behaviours in response to sustained uncertainty.
The report shows that since 2020, UK private investors have increased their share of UK CRE investment from 12% (pre-pandemic) to around 20%, while institutions have reduced their share from 24% to 18%.
Looking back further, it is clear the behaviours of domestic private investors have been shifting since the global financial crisis, having trended upwards since 2009, while institutional volumes have remained broadly flat.
Oliver Kolodseike, author of the report and Director in the Research & Economics team at Colliers, comments: “This research demonstrates that the long-held beliefs we had in the ‘normal’ patterns of behaviours for both domestic private and UK institutional investors have shifted. Private domestic investors tend to behave in what we’d see as an “irrational” way – buying more when property appears overvalued, while at the same time institutional demand retreats.
“Domestic private investors’ willingness to transact is supported by attractive income yields, selective opportunities, and a long-term focus on wealth preservation. They also tend to rely less on debt, allowing them to deploy capital even as financing costs rise. In contrast, institutional investors face immediate headwinds due to higher leverage ratios, prompting a retreat when debt becomes expensive.”
Oliver continues: “Domestic private investors raise their investment activity, on average by 43%, when property is overvalued as they’re less tethered to market fundamentals. At the same time, institutional buyers reduce their exposure, reflecting fundamentally different approaches to risk and return.”
The liquidity that is offered by increased UK private investor activity can be a benefit across asset classes, particularly older office stock and tertiary retail, which are increasingly illiquid and often reliant on opportunistic or private capital buyers willing to underwrite repositioning risk.
Using Colliers’ Fair Value Index, the report predicts that UK property values will likely return to fair value around mid-2026, as financing costs stabilise and pricing adjusts. This rebalancing is expected to trigger a renewed wave of institutional investment and bringing with it more balance to the market.