UBS Asset Management is reinforcing its European property strategy in 2025 with acquisitions in two of the most defensive real estate categories: rental housing in northern UK cities and supermarkets in Germany and the Nordics. According to reporting by Citywire, the alternatives unit of UBS is targeting these “everyday use” assets to secure predictable cash flows in a period where income rather than capital appreciation drives returns.
A Defensive Tilt in 2025
Global institutions are rotating into property sectors tied to essential needs, while stepping back from more cyclical plays. UBS’s own Global Real Estate Outlook (May 2025) highlights that returns this year are expected to come mainly from rental income, with capital values stabilising after the correction of 2023–2024. In that report, residential is identified as the most defensive and resilient segment worldwide.
This explains the dual strategy: build out a professional rental housing platform in the UK regions where affordability and tenant demand are solid, and pair it with grocery-anchored retail in Europe’s largest economies, where food shopping habits continue to favour physical stores and long-term leases.
UK Rental Housing: Scaled Occupancy
Northern UK cities have become institutional magnets. Compared with London, they offer more affordable entry costs and large, durable tenant pools ranging from students to key workers and young professionals. UBS is acquiring entire residential streets, which allows it to standardise maintenance, apply professional management, and achieve economies of scale. That reduces tenant turnover and stabilises net operating income — vital in a year when valuations are flattening rather than rising sharply.
The logic is clear: prioritise steady rental income over speculative price appreciation, aligning with the fund manager’s house view that disciplined operations matter more than short-term market swings.
Supermarkets in Germany and the Nordics: Food Retail Resilience
Supermarkets have long been considered a defensive asset class. In Germany and across Nordic countries, brick-and-mortar outlets remain the dominant grocery channel despite the rise of e-commerce. Industry reports confirm that online penetration in grocery remains relatively low, reinforcing the centrality of physical stores.
These properties typically operate under long leases with established operators, delivering high occupancy and stable rental flows. Recent data shows renewed investor interest in food retail parks, with yields stabilising and tenants benefitting from steady consumer demand. For UBS, adding supermarkets diversifies portfolio income while keeping exposure rooted in everyday consumption.
Fit with UBS Strategy
UBS research expects 2025 property returns to be income-led, with capital values consolidating after a bottoming-out process. The firm stresses the importance of tenant quality, covenant strength, and disciplined underwriting. Residential and food retail assets fit this framework: they provide visibility on rent, inflation protection through indexed leases, and less exposure to cyclical downturns.
In contrast, office and discretionary retail remain more volatile, facing structural shifts in demand and uncertain leasing dynamics. By comparison, residential tenants and supermarket operators meet non-discretionary needs, ensuring a steadier base of income.
What Investors Should Monitor
For investors, key watchpoints lie in lease mechanics and tenant strength. In food retail, the financial health of operators and the quality of local catchments determine rent durability. In rental housing, professional management and capital expenditure planning are critical to maintaining occupancy and cost predictability. Across both, prudent leverage and staggered refinancing schedules reduce interest-rate risk.
Deal Summary
| Asset class | Geography | Rationale |
|---|---|---|
| Residential streets | Northern UK | Institutional rental platform; stable occupancy; scale efficiencies |
| Supermarkets | Germany, Nordics | Necessity retail; long leases with established operators |
| Portfolio stance | Pan-European | Income-led strategy aligned with UBS 2025 outlook |
Bottom Line
By combining northern UK rental housing with German and Nordic supermarkets, UBS Asset Management is leaning into the assets people use every day. This blend is designed to deliver resilient, inflation-tolerant rental income while capital values stabilise — precisely the balance its 2025 strategy advocates.
