London has reclaimed its position as the UK’s leading destination for property investment, according to new research from Handelsbanken.

The capital has bounced back from fifth place last year to top the rankings in 2025, with 46% of professional landlords and investors naming it the most appealing region for the year ahead.

The findings, published in Handelsbanken’s Property Investor Report 2025, reflect a shifting investment landscape shaped by affordability pressures, changing tenant priorities, and broader economic uncertainty.

Based on a survey of 200 professional investors across the UK, the report shows growing interest in long-term value and market resilience.

RESILIENCE AND LONG-TERM VALUE

Chris Teasdale, Chief Branch Officer at Handelsbanken, says: “London’s comeback is a clear sign that investors are prioritising resilience and long-term value.

“While regional markets have delivered strong returns in recent years, the capital’s infrastructure, rental demand, and global appeal continue to set it apart. This year’s data shows that confidence in London is not just returning, it’s accelerating.”

REGIONAL DIVERGENCE

The East of England, last year’s frontrunner, remains a strong second at 42%, with Cambridge and surrounding areas continuing to attract investors with their combination of innovation hubs and strong local economies.

The South East has also risen in the rankings, cited by 34% of respondents, up from 21.5% last year.

However, the report highlights growing regional divergence. Yorkshire & the Humber, which drew 12.5% of investor interest in 2024, has dropped sharply to just 4.5%, suggesting that confidence in some markets is waning as investors consolidate around areas with perceived long-term strength.

MORE THAN A HEADLINE

James Sproule, UK Chief Economist at Handelsbanken, adds: “London’s rebound is more than a headline, it’s a signal. Investors are recalibrating in response to affordability challenges, tenant demand, and macroeconomic uncertainty. The capital’s fundamentals remain strong, and for many, it represents a safe harbour in a shifting market.”

The report suggests that, while regions such as Wales and the North East have enjoyed rapid capital growth in recent years, investor sentiment is turning back to markets with established infrastructure and reliable rental demand.