Central banks aren't coming to save us – only invention and adaptation will.

Less than two minutes into chairing my first UKREiiF panel, the conference’s central theme revealed itself.

I had just asked James Agar, Head of Real Estate Origination at PIC Capital, a part of Pension Insurance Corporation plc (“PIC”), for a broad view of the market. He side stepped the word that now haunts development from Leeds to Lewisham.

“We live in a very different rate environment than we did a few years ago,” James said. “It’s having a huge impact on the ‘V’ word. Making things stack up and viable is extremely challenging in a rate environment that starts with a five in terms of longer-term gilts.”

The panel, titled 'Alternative Capital, Real Returns: Rethinking Real Estate Finance', carried an implicit acknowledgement that the traditional routes may not be entirely working, and new solutions need to be discovered. Yes, interest rates have eased since last year, but we're still nowhere near the levels that underpinned the old investment playbooks. BNP Paribas forecasts suggest only modest further cuts—just 75bps in base rate reductions by the end of 2026. Although the market hasn’t quite found a consensus on this, it’s time to find workarounds.

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James spelled out his firm's investment strategy, which is that PIC isn't really a real estate investor, it's a credit investor. While the firm buys BTR, Affordable Housing and GPA offices – office buildings with top sustainability credentials let on long leases to central government - it's really all about the income to match their pension liabilities.

"For GPA offices, what I'm really buying is 25 years of central government, risk free cash flows, but making those investments work in this rate environment is incredibly tricky," he added. "When you go to an Investment Committee [they'll point out that] I can buy high credit quality government bonds for the same duration at a higher return. So can you set out why we should buy this illiquid property asset?"

Ouch. And there were still 27 minutes left on the clock.

In our packed BNP Paribas Real Estate pavilion, panel after panel told a similar story: deals that don’t stack up, models that no longer work. Sometimes it was the cost of capital, sometimes the policy environment, sometimes a slow bleed from years of government retreat. The right risk-adjusted returns have become harder to find - and the old routes are drying up. So, what next?

A Full-Time Battle

Innovation holds the key – investors are either dusting off older products that have renewed relevance or finding new methods to draw capital. PIC, for example, is utilising income strips or as they refer to them regeneration leases to generate long-term, bond-like cash flows from real estate assets. These are long-term lease structures that let investors receive inflation-linked rent from a secure tenant - typically a local or combined authority- before handing the asset back at term-end. These instruments aren’t new – they’ve been around since the early 2000s – but in a high-rate environment, they’re gaining renewed attention. They offer the kind of predictable, low-risk returns that resonate with investment committees more accustomed to gilts than ground rents. They're not flashy, but they work.

In residential development, viability has become a full-time battle. Developers and funders alike are being forced to rethink everything - tenure mix, design strategy, delivery model. We heard how some are reshaping schemes to avoid delays under the Building Safety Act by switching from high-rise to mid-rise. And across the board, design teams are going back to first principles - stripping out complexity, standardising layouts and engineering costs out early, not late. This is about hard graft rather than reinvention, and it’s making the difference between schemes that move forward and those that stall.

The 'Retrofitting, Risk & Reward: Unlocking the Next Generation of Grade A Offices' panel echoed similar themes. Marion Baeli of 10 Design called for long-term thinking and granular planning, urging owners to sequence decarbonisation upgrades over time - starting with the biggest levers like switching off fossil fuel systems, then layering in comfort improvements and energy efficiency measures to achieve both decarbonisation and occupant comfort. Investors, too, were advised to take a portfolio-wide view, prioritising retrofits not only by emissions, but by lease expiry and tenant alignment. It’s not glamorous, but it’s methodical - and it’s how things are getting done in an otherwise unforgiving market.

Building at Scale

At times, however, challenges are so significant that they demand a rethink at the governmental level. The affordable housing sector is a case in point. As Jacqueline Esimaje-Heath of L&Q put it, many registered providers are "maxed out on the credit card" - they want to build but simply can't take on more debt. The capital is there, the demand is urgent, but the sector’s financial capacity is exhausted. One potential solution, floated repeatedly at UKREiiF, is to reclassify affordable housing as infrastructure. That single policy shift could unlock institutional capital on a new scale, by placing housing alongside schools, roads and hospitals as essential, investible assets. It’s a change that would allow long-term money to enter the sector with fewer hurdles, and with it, the possibility of building at scale our housing crisis demands. 

This idea was one of countless sensible, achievable proposals shared over the three days – I’ll be unpacking more of them in the days to come. That, more than anything, is a reminder of why UKREiiF matters: not just for the networking, but for the collective attempt to sketch out what comes after the downturn. It's becoming clear now that central banks aren’t coming to save us. If the model’s going to be rebuilt, it’ll be rebuilt by us - one workaround, one reimagined deal, one pragmatic plan at a time.

This article first appeared in Green Street News.