Recent market data fromQ2 and Q3 2025 reveals a meaningful recovery underway – one that presents compelling opportunities, particularly in retail parks, where Shariah compliance considerations align naturally with strong investment fundamentals and attractive returns.
The evidence of recovery is unmistakable. For the first time since 2014, all retail subsectors experienced rental growth in H1 2025 according to Avison Young, with overall retail rents rising 2.3%. At the same time investment volumes surged to GBP2.5 billion (US$3.31 billion) in H1 2025, up 11% year-on-year (y-o-y) and vacancy rates are declining, with Savills reporting them at just 5% for retail parks.
A clear bifurcation has emerged, with retail parks as the standout performer. Retail parks attracted GBP1.48 billion (US$1.96 billion) of investment in H1 2025, 59% of total retail investment and up a remarkable 78% y-o-y. Rental growth reached 2.5%, outpacing shopping centers and high streets at 1.9% according to Cluttons.
This outperformance is expected to persist, with Estates Gazette reporting that retail parks are forecast to deliver 11.7% returns in 2025 and 9.5% annually through 2028. This compares favorably to shopping centers and high streets, which face more muted return prospects. For Islamic investors, this divergence is particularly significant. Retail parks present a materially different tenant profile from high streets and shopping centers. The prevalence of Haram occupiers – betting shops, off-licenses and alcohol-related retailers – is substantially lower in retail parks, where the tenant mix is dominated by value retailers, home improvement stores and essential services.
This structural characteristic makes retail parks inherently more suitable for Shariah compliant portfolios, removing a significant compliance friction that has historically complicated Islamic investment in UK retail. The natural alignment between the subsector’s characteristics and Shariah requirements represents a genuine competitive advantage for Islamic investors.
The East Midlands has emerged as a particular hotspot, accounting for 39% of all big box take-up in Q3 2025. Our own 90 North has witnessed this strength firsthand with the retail park we manage in Kidderminster, where tenant demand has proven remarkably resilient, with rental growth outpacing national averages. This validates the data: Midlands retail parks are delivering strong performance.
Institutional investors are returning to the sector, with Savills recording that they account for two-thirds of total capital value transacted year-to-date in 2025, with higher income yields compared to the all-property average and capital appreciation potential proving to make a compelling case for investment.
For Islamic investors, the time to revisit UK retail is now. Retail parks offer an attractive combination of strong fundamentals, more likelihood of Shariah compliance and attractive returns. The Midlands represents a particularly attractive entry point. The narrative of retail’s inevitable obsolescence has been replaced by one of selective recovery, and for Islamic investors, the opportunity is clearThis achievement highlights a resurgence in tenant confidence and underscores the value of our active and engaged approach to asset management.
Written by Philip Churchill, first published in Islamic Finance News Volume 22, Issue 49 dated 10th December 2025.