Vivienne King, Chair of Revo, on why retail is still resilient to perma crisis
While it is too early to draw conclusions on the implications of the Iran war for Middle
Eastern investors in UK real estate, a recent theme in a Property Week news analysis was
the long-term, low-risk nature of Gulf states’ investment in UK real estate and the UK’s
value as a safe haven, particularly for ‘crises capital.
Although the UK is less directly dependent on Middle East oil and gas than other nations, it is exposed to supply chain, transport and wholesale energy market disruption, in what the International Energy
Agency has called the “greatest global energy security challenge in history”.
The UK is experiencing above-target inflation and constrained household spending as consumer confidence plummets. This limits the Bank of England’s ability to ease interest rates and further strains the UK’s stretched public finances, with the government constrained by national debt at over 93% of GDP, as of February. As a result, all sectors, real estate included, are experiencing higher capital costs, constraining deal volumes, development viability and growth.
In this broader context, retail and leisure property occupies a distinct position; it is pivoting from
property-led model to a model linking income to operational success, rather than contractual rent,
making real estate investors directly sensitive to trading conditions. Retail and leisure property
faces rising operating costs in a low-margin sector but, more than any other, it is directly exposed
to consumer sentiment, with trading conditions reflecting cost-of-living concerns, leading to
reduced discretionary spending.
“Major deals this year reflect investors’ conviction in retail, despite the geopolitical backdroр”
But the sector is remarkably resilient. It has been operating in ‘perma crises’ since Covid, with Brexit,
Trussonomics and the Ukraine war – all in the wake of the global credit crunch. Through all these
crises, retail and leisure has proved adept at navigating complex environments. As a result, the
sector is realistic enough to build the likelihood of economic shocks into its calculations and
continue to transact.
Despite the economic headwinds, UK retail and leisure property is drawing investment from private
equity, sovereign wealth and institutional investors. They are attracted by repricing and value-added
opportunities, alongside institutional-grade transparency and regulation; the relative weakness of
sterling; the protection of the rule of law; and the higher yields in the UK compared with much of
the EU. Investors must deploy capital and banks must lend, and the UK offers a safe haven in a time
of crisis.
Conviction in retail
Major deals this year reflect investors’ conviction in retail, despite the geopolitical backdrop.
Redical’s reported £290m purchase of West Midlands shopping centre Merry Hill highlights
confidence in prime retail and leisure destinations. Similarly, L&G Asset Management buying a
Tottenham Court Road retail and leisure block for around £51.5m reflects demand for high street,
retail-led, mixed-use assets, albeit in central London.
Sold on retail: Redical’s Merry Hill shopping centre purchase suggests investors still favour the sector
Retail park investment and leasing continues unabated, with The Crown Estate Scotland’s £5.7m purchase of Seafield Retail Park in Edinburgh. While such deals are likely to have been initiated prior to the Iran war, their completion despite it highlights the willingness of capital to transact even during the heightened uncertainty.
A result of the war is some vendors’ reluctance to market assets, since higher inflation and borrowing costs mean depressed pricing, and uncertainty makes pricing harder to determine with confidence. This wait-and-see approach is constraining deal volumes, but a widening gap between sellers’ and buyers’ expectations may create a window of opportunity for sellers to achieve favourable outcomes as the market adjusts. Some sellers are bucking this trend, though, such as Federated Hermes marketing Crystal Peaks Shopping Centre in Sheffield, and Greater Manchester Pension Fund inviting bids for Morgan Quarter, Cardiff.
Whether an Iran ceasefire will emerge is unknown, but the geopolitical environment presents a level of uncertainty that can spook a market, and how long it continues will be a determining factor in the depth of its impact.
But the sector is highly experienced in adapting to material structural adjustments and what emerges is a selective market, underpinned by the UK’s global appeal. While the here and now is challenging, established structural change, repricing and continued investor interest indicates a sector that is stabilising and repositioning.
As featured in Property Week, on 29 April 2026