Glenigan | Powered by Hubexo, one of the UK construction industry’s leading sources of insight and market intelligence, has released its October 2025 Construction Review, providing a data-driven analysis of project activity across all major (>£100m) and underlying (<£100m) schemes in the UK.
Covering the three months to the end of September 2025, the Glenigan Construction Review delivers a comprehensive view of the industry’s performance, offering developers, contractors, and policymakers a crucial benchmark of sector health amid ongoing economic headwinds.
A sector under strain
The October report reveals a continued and broad-based slowdown across the UK construction landscape. With investor confidence remaining muted and public sector delivery lagging, project momentum has weakened across virtually all verticals.
Across-the-board declines were recorded in project starts, main contract awards, and detailed planning approvals, all of which fell compared to both the previous quarter and the same period in 2024.
- Project starts dropped 15% quarter-on-quarter and are now down 40% compared to last year.
- Detailed planning approvals declined by 21% against the previous quarter and 18% year-on-year.
- Main contract awards showed more resilience, slipping just 2% on Q2 2025, but remain 32% lower than 2024 levels.
Yuliana Ivanykovych, Senior Economist at Glenigan, commented: “The situation seems to be getting worse as the year progresses and, at this rate, something truly transformative will need to happen to kick-start activity. Activity is depressed across both underlying and major projects, a result of low business confidence and the slow progress of government-funded initiatives.”
Ivanykovych added that with the Autumn Budget looming, both investors and government departments are exercising caution:
“Investors are keeping their powder dry, while Government departments are observing for any changes to funding allocations that might put capital projects at risk.”
Residential sector decline deepens
The residential construction sector, historically a key driver of UK construction growth, continues to struggle. The brief resurgence seen earlier in 2025 has faded, with the industry once again posting widespread declines.
Year-on-year, project starts fell 7%, while main contract awards plunged 47% and planning approvals dropped 39%. Private housing developments suffered particularly heavy losses, with social housing schemes also recording a weakened pipeline. Although major project starts in social housing performed relatively strongly compared with last year, this was insufficient to lift the overall figures into positive territory.
Regional data further underlines the uneven landscape. Most UK regions posted lower residential project starts compared to both Q2 and 2024. However, London and the South East offered rare bright spots, with project starts up 8% and 2% year-on-year respectively. Notably, planning approvals rose by 10% in the South East, 28% in the East of England, and 11% in the South West, indicating pockets of renewed intent despite the broader slowdown.
Office and data centre activity defy the trend
In contrast, the office construction sector demonstrated relative resilience, reflecting shifting investment patterns in technology-driven assets. Despite planning approvals collapsing by 76% and main contract awards dipping 9% year-on-year, office project starts surged by an impressive 82% compared with 2024.
This growth has been underpinned by a spike in underlying starts and the Government’s Tech Prosperity Deal, which includes the creation of a £30 billion AI “growth zone” in the North East, positioning the UK as a European hub for data centre development.
London remains the dominant region, capturing 68% of total office project starts, buoyed by flagship schemes such as the £400 million 50 Fenchurch Street development in the City. The North West also posted a 14% increase in project starts, driven by The Republic at Mayfield in Manchester. Together, these developments highlight the growing alignment between commercial real estate and the UK’s digital transformation agenda.
Hotel, leisure, and civils: bright spots amid the gloom
While much of the industry faces contraction, some verticals continue to perform strongly. The Hotel & Leisure sector, for instance, experienced a 93% year-on-year rise in project starts and a 14% increase in main contract awards. Although detailed planning approvals fell 35% compared with 2024, they rose compared to the previous quarter — a sign of stabilising confidence.
This growth has been fuelled by remarkable gains in indoor leisure and sports facility developments. Indoor leisure starts jumped 237%, while sports facility construction soared by 344%. Regional standouts include Manchester’s wellbeing resort and the Cardiff Arena & Hotel Atlantic Wharf, both of which are catalysing investment in experience-led infrastructure.
Meanwhile, the Civils sector has seen a resurgence, with planning approvals up 150% year-on-year and main contract awards increasing 38% compared to Q2 2025. Underlying project figures rose 58% quarter-on-quarter, indicating a strengthening pipeline of infrastructure work.
Much of this optimism is attributed to the Government’s focus on clean energy infrastructure and the approval of several new offshore wind farm projects, which are expected to sustain long-term growth across the civil engineering space.
A sector waiting for stability
The October 2025 Glenigan Construction Review paints a clear picture of an industry caught in a delicate balance between structural challenges and emerging opportunities. While weak investor confidence, thin profit margins, and labour market pressures continue to drag on momentum, targeted public investment in infrastructure and technology-related construction offers a glimmer of hope.
To restore growth, industry leaders will be looking for greater clarity from policymakers, improved access to finance, and decisive action on planning reform, key ingredients to rebuilding confidence and stimulating sustained investment.
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