CBRE reports 2025 as key year for Living sector

CBRE’s mid-year review re-evaluates its predictions for the year ahead, taking into account how factors such as inflation and consumer activity are impacting the real estate market.

The report says that 2025 is a key year for the living sector in particular. This has been driven by the Government’s pledges to boost supply, which are now bearing fruit. CBRE says: “This will be hugely positive for the living spectrum, with investment across sectors including Build-to-Rent, student accommodation, and affordable housing expected to be strong.”

These drivers mean that investment in build-to-rent and student accommodation are both likely to see further growth. But CRBE warns that although rents are set for continued growth, that will not continue indefinitely, reflecting broader inflation and the stretched affordability of tenants. CBRE notes that Rents have increased by 2.1% in the first half of 2025, a deceleration from the 4.4% recorded over the same period last year.

But supply and demand imbalances persist, and CBRE notes that some landlords are leaving the sector due to regulatory requirements. Several factors including higher construction and debt costs, planning delays, and new building safety regulations means the viability of BTR and PBSA development is also still challenging.

One area that looks set for a boost is affordable housing. The Spending Review allocated  £39bn to the Affordable Homes Programme over the next decade. CBRE highlights that not-for-profit providers have commitments to improve their legacy stock, which may lead to more for-profit providers setting into this space.

In addition, the confirmation of a ten-year rent settlement of CPI+1% has given certainty to investors, which will underpin confidence and investment into the sector. CBRE notes that “legislation for social rents will buoy investor sentiment”.