Wales
The Welsh construction market is entering 2026 with cautious but strengthening optimism, supported by continued public sector investment and long‑term commitments in energy, infrastructure and digital transformation.
Recent market intelligence indicates that Wales is set for long‑term growth, driven by strategic national programmes, including the Wylfa small modular reactor, Port Talbot’s green transition and AI Growth Zones, all of which signal expanding opportunities for contractors specialising in infrastructure and energy resilience projects.
Pressures remain, however. Contractors continue to face rising labour costs, fuelled in part by wage uplifts, such as the 4.1% hike in the National Living Wage, and these increases continue to outpace tender price movements. While tender price forecasts for Wales remain stable at around 3.4% into 2026, cost certainty requires developers to adopt early engagement procurement strategies and more robust risk allowances.
Short‑term delivery challenges include sustainable drainage approval delays, skills shortages and selective contractor bidding. Over the long term, Wales remains well‑positioned to benefit from sustained public sector optimism, transformative industrial investment and emerging digital infrastructure.
MARKET CONDITIONS & PIPELINE
Outlook for the Welsh construction industry bolstered by new public sector investment and rise in project starts
Across Wales, on-site construction activity remains steady but cautiously paced, with visible progress in major urban centres including Cardiff, Swansea and key valley towns. Public sector clients continue to show strong optimism, supported by devolved fiscal powers that unlocked an additional £505 million for infrastructure and local development schemes, which is expected to feed directly into near‑term pipelines across education, health and transport.
However, the market is still navigating structural constraints. Planning delays – particularly those linked to sustainable drainage systems (SuDS) – continue to slow early‑stage progress for both private and public schemes. Despite this, most clients remain confident that projects will proceed, and a slight rise in new project starts over the past quarter suggests renewed momentum.
We are seeing growing interest in tall buildings within Cardiff city centre, further supported by strong demand for refurbishment within the public estate. At the same time, Wales is emerging as a hub for digital and energy infrastructure, with data centre investment continuing, alongside preparatory works for significant future energy projects such as the Wylfa small modular reactor and Port Talbot’s transition to low-carbon steel production.
The labour market remains tight, with Wales requiring an additional 11,000 construction workers between 2024 and 2028, further compounding cost and resourcing pressure. Nevertheless, the medium‑term pipeline is buoyed by ongoing investment in infrastructure, industrial transformation and green energy programmes, placing the construction industry in Wales on a positive trajectory for 2026 and beyond.
RLB Market Activity Cycle
The RLB Market Activity Cycle is a representation of the development activity cycle for the construction industry.
RLB considers 10 sectors to be representative of the construction industry as a whole. Each sector is assessed as to which of three activity level zones – peak, mid or trough – best represents the current status of the sector within the cycle. This assessment is then refined by identifying whether the current status is in a growth phase or a decline phase.
The subjective current performance of sectors is identified by ascribing one of the coloured arrows (shown in the legend of the chart) to each sector. NB: In this analysis, sectors are not individually weighted.
▲ Peak Growth ▲ Mid Growth ▲ Trough Growth
▼ Peak Decline ▼ Mid Decline ▼ Trough Decline
Market sector activity analysis: UK
▲ Peak Growth ▲ Mid Growth ▲ Trough Growth
▼ Peak Decline ▼ Mid Decline ▼ Trough Decline
Consolidating the results of multiple regions enables the calculation of a national representation of percentage of sectors in each phase of the cycle at a point in time.
Market sector activity analysis: WALES
▲ Peak Growth ▲ Mid Growth ▲ Trough Growth
▼ Peak Decline ▼ Mid Decline ▼ Trough Decline
Consolidating the results of a region enables the calculation of a regional representation of percentage of sectors in each phase of the cycle at a point in time.
TENDER PRICES
- Tender prices in Wales remain stable, with only marginal quarter‑to‑quarter movements. The latest data shows forecasts holding at around 3.4% for 2026, indicating a balanced market where labour‑driven inflation is largely offset by stabilising or reduced material costs.
- Contractors continue to adopt selective bidding strategies, showing greater interest in new‑build schemes that offer clearer risk profiles compared with refurbishments.
▉ RLB Wales
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors' range (High & Low)
INPUT COSTS
- Contractor pricing behaviour across Wales reflects a market that is engaged but highly selective. Skills shortages – particularly in mechanical, electrical and specialist trades – remain the primary driver of inflation, with large schemes placing additional pressure on labour availability and wage rates.
- Although material costs have generally stabilised and, in some cases, reduced – especially in major commodities such as steel and concrete – MEP‑related costs continue to trend higher due to persistent scarcity of resource. Overall, labour, rather than materials, remains the dominant contributor to cost escalation.
SECTOR FOCUS
Commercial
The commercial sector shows mixed performance. Private office demand remains muted amid investor caution, but the public sector is driving activity through refurbishment projects and estate upgrades. Cardiff’s appetite for tall buildings continues to create development opportunities, although procurement routes and viability are affected by labour‑driven cost pressures.
Industrial
Industrial and energy‑related construction continues to expand, driven by Port Talbot’s decarbonisation efforts, investment in data centres, and emerging hydrogen‑readiness projects across South Wales. Despite strong long‑term demand, SMEs face margin pressures from rising labour costs. The sector is expected to outperform many others over the next several years.
Infrastructure
Infrastructure remains one of Wales’ strongest sectors, supported by major transport upgrades and early Crossrail Cymru activity. Further momentum is provided by long‑term energy infrastructure commitments and regional regeneration funding. Planning and regulatory delays persist, but public sector optimism and investment signals point to robust future workloads.
Residential
The high‑end residential market has softened due to tax changes such as mansion tax proposals and council tax surcharges, reducing investor appetite. However, affordable and build‑to‑rent housing remain comparatively strong. Output remains constrained by planning delays and labour shortages, which continue to impede delivery despite persistent demand.
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