69% of UK property investors lack confidence in the Labour government’s ability to effectively manage the economy according to a survey conducted by Excellion Capital.

The research highlights growing concerns about economic volatility, with investors citing high interest rates, rising construction costs, and regulatory changes as key challenges.

The survey, which focused on investors with assets exceeding £500,000, identified residential property as the primary area of interest for 63.1% of respondents in 2025. Hospitality and leisure followed at 19.5%, while retail garnered 9%. Additional sectors of interest included mixed-use developments (8.1%), industrial properties (7.2%), and office spaces (5.4%).

Regarding investment strategies, 43.8% of respondents plan to prioritize acquisitions, with renovation projects (29.7%) and development efforts (14.1%) ranking as the next most popular strategies. Land acquisition and conversions each accounted for 6.3% of plans.

Traditional lenders, including banks, remain the preferred source of financing for 75.9% of investors. Other financing options included private investors (11.1%), debt funds (9.3%), and joint ventures (3.7%).

Investors cited high interest rates as the most significant barrier to securing financing, with 20.2% identifying it as their top concern. Economic volatility and construction cost increases followed, each at 11.5%. Other obstacles included strict loan-to-value requirements (9.6%) and reduced credit availability (6.7%).

Post-financing, the most pressing challenges are regulatory changes by the Labour government, noted by 24.8% of respondents, recession risks (20.9%), and sustained high interest rates (17.8%). Additional concerns included inflationary pressures (14%) and geopolitical instability (7%).

When asked about measures to improve the property investment landscape, investors highlighted several priorities for the government: driving economic growth (15.3%), addressing the cost of living (13.1%), reducing public debt (12.3%), and tackling inflation (11.6%).

Investor confidence remains subdued. On a scale of 1 to 10, the most common confidence level for making new investments was 1, reported by 17.9% of respondents. Only 36.9% rated their confidence between 6 and 10. Confidence in taking on new debt was similarly low, with 38.1% rating their confidence at 1, and fewer than 17% scoring themselves above a 5.

Ashley Marks, head of real estate at Excellion Capital, commented on the current sentiment in the market: “Twelve months ago, as we looked ahead to 2024, there was a genuine sense of optimism in the property market that hadn’t been felt since before the pandemic.

“So it’s incredibly frustrating for investors to be now looking into 2025 with so many obstacles and challenges still in their way, from high interest rates, inflation, geopolitical pressures and, specifically in the UK, an economy that has failed to grow and an Autumn Statement that appears to have further damaged trust in government.”

Marks also underscored Excellion Capital’s ability to support investors in navigating these challenges: “But, here at Excellion Capital, we are in the business of solving problems for investors.

“When interest rates are high, we help to reduce the cost of debt capital – clients have come to us paying for expensive debt and we have reduced their margins by nearly 4%.

“We know our way around the real estate lending market, so in times like today, when lenders are more restrictive, we know where the most relief can be found – and it’s rarely from the traditional lenders.”

Marks further acknowledged the expertise of Excellion’s clients while highlighting the importance of efficient financial solutions: “Our clients are experts in property investment, from identifying the right opportunities through to maximising profitability through considered design and a sixth sense for evolving market appetites.

“But it is extremely challenging for investors to keep track of the latest developments in property finance, so we are here to ensure that their projects find the best funding they can get in the most efficient and cost-effective way.

“There are always ways to navigate a challenging environment, and those who keep pushing forward when the sea is choppy will be well ahead of the regatta by the time the waters become more calm.”