Signs of Market Turnaround in Latest Glenigan Forecast

FOLLOWING a subdued end to 2024, Glenigan’s UK Construction Industry Forecast 2025-2027 released today forecasts a significant performance uplift across the sector.

Headline figures show UK construction is set to grow by 24% over the forecast period, with positive momentum building in 2025 (+3%), strengthening further in 2026 (+10%), and reaching a peak in 2027 (+11%). This sustained recovery is driven by improved consumer and business confidence, as well as increased public investment in infrastructure.

Among the highlights, private housebuilding is forecast to rise by 18% in 2027, reflecting rising demand and renewed developer activity. The Industrial & Commercial sectors are also expected to gain ground gradually, buoyed by stronger economic growth and increased business investment. Furthermore, the latest Spending Review has unlocked additional funding, fuelling capital programmes that will support growth in the latter part of the forecast.

Glenigan Industry Forecast 2025-2027

Private Residential

Impending stamp duty increases from April provided an added impetus to housing market activity during the first quarter of this year as purchasers rushed to complete ahead of the tax rise. Although some retrenchment is expected in the second quarter, it is likely to be short-lived. Increasing household incomes, lower mortgage rates and a brightening economic outlook are expected to lift housing market activity during the second half of this year and during 2026.

Improved market conditions helped to lift private housing starts during the first four months of 2025. Rising real incomes and further interest rate cuts are expected to further buoy house-buyers confidence over the next three years. Planning reforms are expected to release more development sites, supporting sector growth in the later stages of the forecast period.

Private Non-Residential Work

The industrial sector is forecast to return to growth from 2025. Demand for logistics space is expected to drive sector activity over the next three years as higher consumer spending is set to lift the demand for logistics and light industrial space from online retailers and third-party carriers.

Retail

Retail construction will be slower to recover. In the near term, retailers face increased cost pressures due to National Insurance rises and the increase in the minimum wage. An overhang of empty retail premises is also expected to deter investment in new premises although it may also prompt landlords to refresh and repurpose existing excess retail space including shopping centres to create more mixed-use locations.

Hotel & Leisure

Hotel & leisure starts rebounded during 2024. Like retailing the hospitality sector is currently facing a marked increase in labour costs that is expected to squeeze margins and limit the funds available for investment near term. However, an improvement in households’ financial position is set to benefit the hospitality sector through higher consumer discretionary spending. This is expected to underpin a progressive strengthening in investors’ confidence and investment in the sector during 2026 and 2027.

Office

Office starts continued to decline last year, dropping by 16% as higher borrowing costs and an overhang of available floorspace prompted investors to defer planned projects. The sector is expected to return to growth from this year as lower borrowing costs renew investor interest. Although changing working patterns are reducing the overall demand for office space, they also remain an important driver for office refurbishment projects as landlords and occupiers remodel premise to support hybrid working. In addition, regulatory changes and growing demand for premium office space with a good environmental performance is forecast to generate retrofit and new build opportunities over the forecast period.

Overall, Glenigan says these projections suggest a decisive turnaround for the industry, offering opportunities for growth across key sectors.

Download Glenigan’s UK Construction Industry Forecast 2025-27.

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