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Future of Property 2025

UK real estate sits at the heart of economic growth

Complex scale model on the table, real estate developers, architects and businessmen team working on new business buildings project in office
Complex scale model on the table, real estate developers, architects and businessmen team working on new business buildings project in office

Paul Richards

Chief Executive Officer, The Association of Real Estate Funds

The Government has three clear priorities: growth, housing and net zero. The King’s speech1 to Parliament on 17 July, mentioned pension investment and economic growth in the first minute alone.


This long-term agenda touches everyone in the UK – especially those in real estate, a sector with a huge part to play in all three priorities. It is also relevant for the 80%2 of workers saving in a pension.

The Government wants to explore ways of improving their investment outcomes while encouraging pension funds to invest in growth, housing and retrofitting for net zero. Much of this investment will be aimed at real estate. However, while there are favourable factors driving growth, the sector also faces several challenges.

DC real estate challenges

Traditional corporate defined benefit pension funds are mostly in run-off or going for insurance buy-outs and are reducing their real estate investments. The defined contribution funds replacing them want to invest in real estate but find it difficult to do so, especially in construction and retrofitting projects. 

These difficulties come from quirks within the defined contribution (DC) system. The industry has engaged with regulators and the Government for some time, and the new Government is now addressing the problems. 

The property industry is working
with investment platforms to allow
them to hold funds with notice periods.

Property investment for growth

  • The property industry is working with investment platforms to allow them to hold funds with notice periods — the kind of funds that will build houses and retrofit old buildings for net zero and house growth businesses.
  • The new Government recently announced measures3 to force consolidation of smaller DC funds to give them the scale to compete for investment opportunities with their international counterparts.
  • New collective DC fund structures are being developed, which allow illiquid assets — like real estate — to be held and facilitate investment in larger development projects.

At the same time, we have innovations from our own industry, like the Reserved Investor Fund. With so much of our industry based offshore, this new fund idea brings it back onto the mainland, making it simple for DC pensions to invest in things like property.

There are plenty of opportunities for investing in property for economic growth, and we have a world-class setup to facilitate it. It just needs a little more tinkering.


[1] gov.uk. 2024. The King’s Speech 2024.
[2] gov.uk. 2024. Workplace pension participation and savings trends of eligible employees: 2009 to 2023. Department for Work & Pensions.
[3] gov.uk. 2024. Pensions Investment Review: Unlocking the UK pensions market for growth.

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