Investors often weigh property against stocks for portfolio growth. In 2025, a £5 million property portfolio in the UK offered unique advantages, driven by rental yields and capital appreciation. This article compares its performance to stocks, focusing on the S&P 500 and FTSE 100. Using market data, we explore returns, risks, and trends shaping both asset classes. While stocks faced volatility from trade tensions, UK property delivered steady gains. Discover how a £5 million property portfolio stacked up and what drove its edge in 2025.
Setting the Stage for 2025
A £5 million property portfolio in the UK typically includes buy-to-let properties, commercial real estate, or luxury residences in prime locations like London. Stocks, represented by indices like the S&P 500 and FTSE 100, offer liquidity but faced challenges in 2025. Let’s break down how these assets performed.
UK Property Portfolio Performance
A £5 million property portfolio in 2025 likely saw total returns of 7-10%, combining capital appreciation and rental yields. According to Savills, UK house prices grew 2.5% in 2025, with prime London markets like Belgravia hitting 3.5%. Rental yields averaged 4-6% nationally, with cities like Manchester offering up to 7%. For a £5 million portfolio, this translates to:
- Capital Appreciation: £125,000-£175,000 (2.5-3.5% growth).
- Rental Income: £200,000-£300,000 (4-6% yield).
- Total Return: £325,000-£475,000, or 6.5-9.5% annually.
High-demand areas like Birmingham and regional cities boosted returns, with yields in Scotland reaching 17.3% for some properties.
Stock Market Performance in 2025
Stocks faced a turbulent 2025. The S&P 500, a benchmark for global equities, was down 3% year-to-date by May, hit by tariff announcements and trade war fears. The FTSE 100, more relevant for UK investors, saw modest gains of 2-3%, driven by dividend reinvestment. Assuming a £5 million stock portfolio tracking the FTSE 100 with dividends reinvested (yielding 3.5%), returns were:
Capital Gains: £100,000-£150,000 (2-3% growth).
Dividends: £175,000 (3.5% yield).
Total Return: £275,000-£325,000, or 5.5-6.5% annually.
Volatility, with a 6% S&P 500 drop post-tariffs, hurt stock performance.
Comparing Returns
A £5 million UK property portfolio likely outperformed stocks by 1-4% in 2025. Property delivered £325,000-£475,000 in total returns, compared to £275,000-£325,000 for a FTSE 100 stock portfolio. This gap, equating to £50,000-£150,000, stems from higher rental yields and stable property price growth. Even against the S&P 500’s negative returns, property’s edge was clear.
Why Property Outperformed
Several factors gave property the upper hand:
Stable Rental Income
Rental demand remained robust, with UK rents rising 4% in 2025. Cities like Manchester and Birmingham saw strong tenant demand, ensuring steady cash flow.
Tax Advantages
Property investors benefited from tax strategies like mortgage interest relief for buy-to-let properties. Stocks faced capital gains tax, with UK rates unchanged in 2025, impacting net returns.
Lower Volatility
Stocks faced sharp declines, with the S&P 500 entering bear market territory in April. Property, less liquid but more stable, avoided such swings.
Regional Growth
UK regional cities outperformed London, with yields in Scotland and the North-East hitting 12-17%. This diversification boosted portfolio returns.
Risks and Challenges
Property isn’t without risks. Maintenance costs, averaging 1-2% of property value (£50,000-£100,000 for a £5 million portfolio), cut into returns. Liquidity is lower, with sales taking 30-60 days. Stocks, while volatile, offer instant liquidity and lower upkeep costs.
Historical Context
Over the past 30 years, UK stocks (with dividends reinvested) returned 9.9% annually, outpacing property’s 7-8%. However, during volatile periods like 2000-2014, property delivered 132% returns compared to 83% for stocks. In 2025’s uncertain climate, property regained its edge.
Strategies for Investors
To maximise property returns:
Focus on High-Yield Areas: Invest in cities like Manchester or Scotland for 6-17% yields.
Diversify Property Types: Mix residential, commercial, and off-plan properties for balance.
Leverage Expertise: Work with firms like ourselves for market insights.
Monitor Stocks: Rebalance portfolios if stock volatility subsides, as suggested by Morningstar.
Future Outlook
Knight Frank predicts UK property price growth of 19.3% by 2029, with rents rising 17.6%. Stocks may recover if trade tensions ease, but property’s stability makes it a safer bet for 2025-2026.
Our take
In 2025, a £5 million UK property portfolio likely outperformed stocks by £50,000-£150,000, driven by rental yields and steady appreciation. While stocks faced volatility, property offered stability and income. Investors should weigh liquidity needs and maintenance costs but consider property for long-term gains in a dynamic market.
If you require factual, current and professional property guidance from a company that cares about your money as much as you do – then get in touch. Our team of specialists will give honest, clear and tangible advice that has your best interests at heart. Get in touch today for a free, no obligation consultation.
The ultimate community for global investors.
