Mark Colquhoun of Morton Fraser MacRoberts discusses why the UK is a magnet for French funds

Mark Colquhoun is legal director in the commercial real estate team at Morton Fraser MacRoberts

Recent acquisitions, including a French SCPI fund’s £28.6m purchase of the Ipswich Waitrose and John Lewis store, suggests SCPI capital not only remains active but is diversifying across sectors and regions.

But with rising energy prices and geopolitical tensions adding fresh uncertainty to 2026’s economic outlook, can SCPIs sustain the pace of acquisitions seen in 2025? Or will predicted high interest rates curb their appetite?

SCPIs, which enable individuals to invest in property without directly owning or managing assets, are built to feed on capital raised by a broad range of private investors who subscribe on a monthly or quarterly basis. As they do not rely heavily on debt and have a constant funds inflow, they can remain active particularly in periods of uncertainty.

Many French-related managers and SCPIs, including La Française, have used these resilient funds as a chance to diversify their portfolios by moving away from domestic properties to explore opportunities overseas. Cities such as Glasgow and Aberdeen have been affected by this trend due to their competitive operating costs compared with other major UK and EU cities. Aberdeen especially has seen recent acquisitions from these funds ranging from £7m to £15m.

Prime real estate assets such as regional offices and retail parks can be acquired at more competitive yields in markets such as the UK and Ireland than in France. This trend has grown over the years, with domestic French acquisitions accounting for only 20% of all SCPI purchases in 2025, compared with 80% in 2015.

But with geopolitical tensions growing and oil prices rising rapidly, this trend may slow or even force buyers into becoming more strategic with cross-border investments, targeting countries that are more durable when it comes to economic turmoil.

Gallic go-to: French funds have been particularly active buyers in the Aberdeen market

Despite warnings that renewed energy shocks and geopolitical tensions could push interest rates higher again, the Bank of England has so far kept rates at 3.75%. The UK also continues to outperform France and Germany in GDP growth. While uncertainty persists, many investors still expect rates to fall in the coming years, a trend that could provide renewed momentum for the real estate market.

For French SCPIs, this optimism, combined with faster transaction processes and a deep pool of investment opportunities, has reinforced the UK’s position as one of the most appealing destinations for capital. By Q1 2025, almost a third of all SCPI investment had been allocated to the UK.

SCPIs appear well positioned to maintain the strong momentum seen throughout 2025, supported by a flexible structure and the ability to move quickly in uncertain markets. But the very conditions that created opportunities for SCPIs over the past year might not last forever.

If inflation eases, interest rates start to fall and confidence returns to the wider real estate market, competition for high-quality assets is likely to increase significantly. The UK government is already seeking to attract greater levels of foreign capital, particularly from large overseas pension and infrastructure investors, reinforcing the perception of the UK as a long-term investment destination.

While that renewed confidence would be positive for the wider market, it could reduce the number of undervalued or opportunistic deals SCPIs capitalised on in 2025. As more investors re-enter the market, pricing pressure is likely to intensify. In many ways, for SCPIs to continue performing at the pace seen over the last year, they may require the road ahead to remain somewhat uncertain.

Mark Colquhoun is legal director in the commercial real estate team at Morton Fraser MacRoberts