Glenigan | powered by Hubexo has released its UK Construction Industry Autumn Forecast 2026–2027, offering a detailed assessment of the underlying project pipeline and signalling a measured return to growth from 2026 onwards. Although the sector has faced rising geopolitical and economic pressures during the second half of 2025, the outlook for digital construction, modern methods of delivery and low-carbon development remains constructive.
The Autumn Forecast focuses on projects valued below £100m and provides visibility across residential, commercial, industrial and public sector construction. While the near-term challenges are clear, Glenigan’s modelling shows that the sector is moving towards a more stable footing, supported by targeted investment, stronger real incomes, and a clearer policy framework expected after the Chancellor’s upcoming Budget.
Growth expectations stabilise after a volatile year
The updated UK construction market forecast shows that anticipated growth for 2025 and 2026 has been revised following the turbulence seen over the summer and autumn. Construction starts are now expected to fall by 6% in 2025, reflecting delayed investment decisions, disrupted supply chains and fluctuations in policymaking. Growth estimated for 2026 has also been adjusted downward to 8%.
However, Glenigan’s Economics Unit forecasts a more substantial 13% rise in activity in 2027 as confidence returns and delayed projects move forward. The ability of the industry to remain stable during a period marked by international conflict, trade disputes and domestic uncertainty demonstrates the resilience of contractors, consultants and supply chains. The expectation now is that the Autumn Budget will provide the clarity required to accelerate activity and unlock stalled pipelines across multiple verticals.
Anticipation builds across key construction verticals
Signals of renewed activity are emerging as both private and public sector clients move closer to releasing new work. Residential construction is expected to return to positive figures after a difficult summer and autumn in 2025. In the commercial space, the strong performance of office refurbishment projects during Q3 and Q4 suggests continued demand for modernised workspace aligned with hybrid working patterns and evolving environmental standards.
Improved consumer confidence following fiscal policy announcements is also projected to increase discretionary spending, which in turn is likely to support industrial construction starts. The continued shift towards online retail is expected to drive demand for logistics and warehouse facilities through 2026 and 2027. Hotel and leisure construction could also benefit from stronger household finances and improved market stability.
On the public side, the government’s renewed commitment to capital investment, Net Zero targets and social infrastructure is expected to stimulate project starts across health, education, social housing and renewables. The transition to low-carbon construction, combined with the need to upgrade ageing assets, will create opportunities for contractors specialising in retrofit, digital construction technologies and energy-efficient building systems.
Allan Wilen, Glenigan’s Economic Director, notes that unpredictability continues to shape market conditions. He highlights that inconsistent signals around government policy dampened confidence during the latter part of 2025, contributing to weaker project starts. However, he emphasises that opportunities remain embedded across multiple verticals, particularly for firms able to diversify into low-carbon construction, specialist fit-out and services designed to support changing demographic needs.
Residential construction outlook: market holds its position
The private residential construction sector experienced a reassessment of growth expectations after the softening of market confidence and reduced property transactions during Q2 and Q3 2025. A brief recovery early in the year was undermined by the increase in stamp duty in April and delays in apartment starts linked to Building Safety Regulator approvals.
Even so, the market has remained broadly stable during the second half of the year. Mortgage approvals are close to pre-pandemic norms, supported by higher household incomes. From 2026, rising real wages, interest rate reductions and planning system reforms are expected to lift housing market activity. The forecast also anticipates easing of supply-side constraints as BSR backlogs reduce, supporting more consistent residential development starts.
Non-residential construction: industrial, retail, hospitality and offices
The industrial sector continues to benefit from sustained demand for warehousing and logistics facilities. Although manufacturing project starts declined, these were offset by strong warehousing activity driven by online retail and the expansion of third-party logistics providers. This trend is expected to continue, supporting wider industrial construction growth in 2026 and 2027.
Retail construction remains subdued as operators manage rising labour and operational costs. High vacancy rates are discouraging investment in new space, but the need to repurpose surplus retail properties may generate refurbishment and redevelopment opportunities. Discount supermarket chains remain a source of ongoing growth.
In hospitality, higher labour costs have constrained investment, yet improved household finances from 2026 are expected to support a recovery in hotel and leisure construction.
One of the strongest performers in 2025 has been the office market. Lower borrowing costs have supported both refurbishment and new build activity. Hybrid work models are prompting businesses to reconfigure space to improve environmental performance and workplace flexibility, creating continued demand for commercial office refurbishment in 2026–2027.
Public sector construction: capital investment to drive renewed growth
Government funding commitments in the Spending Review indicate rising capital investment from mid-2026. Although uncertainty in 2025 disrupted planning for school and college projects, a more stable pipeline is expected to support growth in education construction, particularly further education facilities linked to vocational training.
NHS budgets have prioritised diagnostic technology this year, but increased capital funding from 2026 will enable trusts to address maintenance backlogs. Social housing development is also set to strengthen as housing associations gain access to new funding sources. Student accommodation starts are already recovering after a sharp decline in 2024.
Infrastructure construction, including road and rail, was delayed by post-election programme reviews, but new investment frameworks outlined in the Spending Review point toward a recovery in starts from 2026. Water industry activity is expected to rise as AMP8 programmes progress, alongside increased investment in renewable generation and grid upgrades, reinforcing the wider Net Zero construction pipeline.
A sector preparing for long-term recovery
While 2025 has been defined by volatility and uncertainty, the UK construction sector is positioning itself for a return to steady growth from 2026. The Autumn Forecast shows that underlying demand across residential, commercial, industrial and public sector markets remains intact. Digital construction, low-carbon development and the need to upgrade critical infrastructure are expected to shape the next phase of sector activity.
With improved policy clarity and stronger economic conditions anticipated from next year, contractors, consultants and supply chains have an opportunity to capitalise on a more stable and predictable project landscape. The coming years are set to be defined not by rapid expansion, but by consistent growth driven by long-term investment and the transformation of the built environment.
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