TARIFFS AND PROPERTY INVESTMENT New inward investment in the UK property industry?

Headshot of Kevin Joyce, property investment analyst

In the context of unpredictable global tariff impositions, Kevin here considers the implications and opportunities for investment options for UK property. 

The impact of current tariff trade wars on economies around the globe is a black swan event where the uncertainty around economic outcomes and the extent of longer term ramifications for international trade are currently unclear. 

A black swan with a red beak gracefully swimming

Author note: The black swan is, l think, one of only two seen in London in recent time, taken in St James Park. 

As investors hate uncertainty, markets which can offer relatively stable and predictable economic environments will generally prove more attractive for investment than markets which are more intense and volatile. At this time, a widely reported shift in focus away from US stocks is reflecting a change of investment sentiment heavily impacted by political unpredictability (1), (2), with other investment markets expected to be beneficiaries of this change. 

At a recent Association of Investment Companies webinar (2 June 2025), the view was expressed that the impact of tariff trade wars has been unexpectedly positive for Europe, with ‘the imposition of tariffs on key trading partners and the threat of further escalation, prompting investors to reconsider the geographical concentration of their portfolios’ (George Cooke, Montanaro Small Companies trust (3)). 

There is some consensus that both the US and UK economies would be negatively impacted by retaliatory tariffs, which may open up new opportunities (4). If the UK in particular should be increasingly seen as offering the stable and predictable environment that investors seek, increased inward investment might be expected to benefit not only stocks and bond markets, but alternative asset classes such as real estate as well. 

There could be project specific benefits, for example, if say a UK developer struggling to attract investment into a new scheme should find that the pool of prospective investors has become enlarged, increased competition perhaps also allowing them more scope to structure the terms of a development partnership in more financially advantageous ways. 

New strategic alliances might be formed, say between UK development and overseas investment partners. Because of the informal nature of the alliances though, with neither party(s) having clear control over the other, a high level of mutual trust and a full willingness to pool resources and share ideas and expertise, may be necessary for the alliances to work well (5). 

More formal joint ventures could be entered into, these partnerships also being reliant on pooled resources, ideas and expertise, as well as other arrangements, including management teams with sufficient and appropriate skills and expertise being allocated to the ventures, and venture termination clauses being clear and unequivocal. 

Strategic alliances and joint ventures may lead on to full mergers or acquisitions, but this can be fraught with its own, and not always easily predictable, risks. For example, cultural business differences might emerge that had not been so evident previously, integration of different management practices or information systems could prove more time consuming than the partners had anticipated, or management and staff in the acquired partner in particular might become disillusioned or demotivated. 

The right choice of partner could be pivotal to a strategic alliance, joint venture, or merger or acquisition, realising mutually beneficial outcomes. 

A strong symbiosis between the partners, reflected say in there being a clear shared vision between them, a good alignment of their core values and purposes, and effective strategic management systems being in place, might offer the partnership the best prospects of success. Better still perhaps, if both should share a willingness to engage in blue ocean thinking to explore new profitable ways to further develop their relationship and business. 

Increased project specific and broader partnership creation activity could benefit not only the participants involved, but also the financial services sector, in the City of London, for example, engaged in supporting and facilitating the generation of the new activity. 

City of London from the South Bank

References 

1. ‘US stock market loses $4 trillion in value as Trump ploughs ahead on tariffs’ 10 March 2025 Reuters www.reuters.com 

2.  ‘Investors retreat from US markets amid demand for global diversification’ 8 April 2025 Banking Exchange www.bankingexchange.com 

3. ‘European investment trusts: opportunities amid trade war tension’ 2 June 2025 Association of Investment Companies webinar www.theaic.co.uk 

4. ‘Why the UK may outperform other nations amid Trump’s tariff war’ 5 April 2025 Samra Ahmed Forbes Middle East 

5. ‘East-West Cross-Border Strategic Alliances’ Kevin Joyce 2013 Spring Terrier p57-60.