{"id":535292,"date":"2026-01-06T11:49:50","date_gmt":"2026-01-06T11:49:50","guid":{"rendered":"https:\/\/www.constructionnews.co.uk\/?p=535292"},"modified":"2026-01-06T11:49:50","modified_gmt":"2026-01-06T11:49:50","slug":"building-momentum-uk-construction-outlook-2026-27","status":"publish","type":"post","link":"https:\/\/www.constructionnews.co.uk\/cn-intelligence\/building-momentum-uk-construction-outlook-2026-27-06-01-2026\/","title":{"rendered":"Building momentum: UK construction outlook 2026\/27"},"content":{"rendered":"

Allan Wilen is economics director at Glenigan<\/em><\/strong><\/p>\n

After a challenging 2025, the outlook for the UK construction industry is set to brighten over the next two years. While geopolitical uncertainty remains a risk, we expect a strengthening in domestic demand and investment to underpin construction growth.\u00a0<\/span><\/p>\n

\u201cOnline retail continues to fuel demand for warehousing and light industrial space, with double digit growth in project starts expected during 2026 and 2027\u201d<\/p><\/blockquote>\n

Glenigan is forecasting an 8 per cent rise in project starts next year, with growth strengthening to 13 per cent in 2027, supported by stronger household incomes, lower borrowing costs, and a decisive increase in public sector investment. For contractors, developers and suppliers, this will generate new opportunities as various construction sectors return to growth over the next two years.<\/p>\n

Private sector recovery<\/h3>\n

Property transactions and house prices temporarily softened during the second quarter of 2025 following April\u2019s stamp duty increase and housing market activity has been broadly stable during the second half of the year. A corresponding rise in private housing starts during the first four months of 2025 proved short-lived, with starts falling back during the second half of the year. Apartment projects were especially weak as slow approval by the Building Safety Regulator (BSR) delayed project starts.<\/p>\n

The housing market is forecast to return to growth from 2026. Rising real incomes and further interest rate cuts are expected to lift house-buyers confidence from 2026. Supply-side restraints are also expected to ease as the BSR reduces the backlog of projects awaiting approval.<\/p>\n

Industrial and logistics construction will also benefit from consumer trends. Online retail continues to fuel demand for warehousing and light industrial space, with double digit growth in project starts expected during 2026 and 2027.<\/p>\n

Office construction was a bright spot during 2025 and is forecast to be a growth sector over the next two years. Hybrid working patterns and environmental standards are reshaping demand, driving refurbishment projects and creating opportunities for the construction of new premium office space. In addition, increased investment in data centres will further fuel sector growth.<\/p>\n

Hospitality and leisure, though squeezed by rising labour costs in recent years, are poised for renewed investment. As household finances improve, discretionary spending will support hotel and leisure developments, with activity forecast to rise by 12 per cent in 2027.<\/p>\n

Upturn in public sector investment<\/strong><\/h3>\n

While the industry will not have welcomed everything in this autumn\u2019s Budget, it is encouraging that the chancellor reiterated the government\u2019s commitment to \u00a3120bn of capital investment previously set out in the Spending Review. It\u2019s vital the government now rapidly delivers on these commitments.<\/p>\n

The promised increased in departmental capital spending is expected to increase public sector activity from mid-2026. Education construction is forecast to rise 15 per cent in 2026, particularly in further education as vocational training gains priority.<\/p>\n

Health sector activity is expected to climb 15 per cent in 2027, as trusts tackle the repair backlog on their estates as well as invest to support the delivery of the government\u2019s 10-year NHS strategy.<\/p>\n

After a weak performance in 2025, a sustained increase in civil engineering projects is anticipated over the next two years. Infrastructure projects are expected to rise, supported by \u00a324 billion of capital funding in the Spending Review for the strategic road network. Major railway projects, such as HS2 and the Transpennine Route Upgrade, are also set to support sector growth throughout the period.<\/p>\n

Utilities work is expected to grow strongly, driven by higher investment in electricity generation and distribution to support the UK\u2019s net-zero transition. This expansion reflects efforts to modernise infrastructure, integrate renewable energy, and meet rising demand for resilient and sustainable utility services. In addition, increased capital spending by the water industry as AMP8 gathers momentum will further lift sector activity.<\/p>\n

After a disappointing 2025, construction prospects are forecast to brighten over the next two years. Improving consumer confidence, lower borrowing costs and increased investment by government and utilities companies are set to generate new opportunities for the industry.<\/p>\n","protected":false},"excerpt":{"rendered":"

Allan Wilen is economics director at Glenigan After a challenging 2025, the outlook for the UK construction industry is set to brighten over the next two years. While geopolitical uncertainty remains a risk, we expect a strengthening in domestic demand and investment to underpin construction growth.\u00a0 \u201cOnline retail continues to fuel demand for warehousing and …<\/p>\n","protected":false},"author":1,"featured_media":472490,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[74631,74630,567],"tags":[],"class_list":["post-535292","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-allan-wilen","category-cn-intelligence","category-opinion"],"yoast_head":"\nBuilding momentum: UK construction outlook 2026\/27 | Construction News<\/title>\n<meta name=\"description\" content=\"Allan Wilen is economics director at Glenigan After a challenging 2025, the outlook for the UK construction industry is set to brighten over the next two\" \/>\n<meta name=\"robots\" content=\"index, follow, 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