INSIGHTS
Construction Market Intelligence
UK Edition
Q3 2025
London
London’s construction market continues to be active but it is a mixed picture. Encouragingly, major projects such as 55 and 99 Bishopsgate reflect renewed confidence in the capital’s long-term potential. RLB sees a tempered but positive outlook, with the government’s infrastructure push and streamlining of Building Safety Act processes helping to unlock activity.
Labour remains the most significant inflationary driver, particularly in high-demand sectors such as data centres and commercial fit-out. While material costs have broadly stabilised, tender prices are forecast to rise by 3% over the next year, which makes early contractor engagement critical. Two-stage tendering remains key to managing delivery risk in this tightening procurement landscape.
MARKET CONDITIONS & PIPELINE
Market’s resilience reflected in growing confidence among developers
London’s construction market remains resilient, with activity broadly sustained and several delayed projects beginning to re-mobilise.
While the economic backdrop is still challenging – marked by persistent inflationary pressure, volatile material costs, and the lingering impact of April’s National Insurance rise, confidence is gradually returning in select sectors.
The project pipeline is steady, supported by ongoing investment in infrastructure and public sector schemes. Notably, construction is progressing at HS2’s Old Oak Common station, the UK’s largest new rail interchange, with the government reversing the previous pause on the Euston Tunnel Link.
Strong international interest continues in London’s prime commercial and mixed-use developments. For example, 55 Bishopsgate will be the City’s first major new-build tower to be completed since the pandemic.
Planning activity has picked up since earlier this year, especially in the outer boroughs and transport-led regeneration zones like Old Oak Common. A 54-storey commercial tower at 99 Bishopsgate, approved in Q1 2025, is now ramping up demolition preparations, marking a shift from planning to execution and reflecting growing developer confidence.
The Building Safety Act’s impact persists, particularly in residential high-rise projects. While Gateway 2 approvals still add 12 to 18 months to some programmes, increased familiarity with the process and early design front-loading are helping to streamline approvals.
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: LONDON
▲ 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 London are forecast to settle at around 3% over the next 12 months, but ticking up from 2026 and beyond.
▉ RLB London
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors' range (High & Low)
INPUT COSTS
- Labour remains the single largest inflationary pressure, particularly for skilled trades such as bricklayers, dryliners and M&E specialists. This is exacerbated by continued reduction in EU labour availability, an ageing workforce, and the impact of April’s National Insurance increase.
- Trades availability is tightening in the fit-out, façade and data centre infrastructure sectors, all of which are busy.
- Material costs have stabilised overall, with fewer sharp spikes than in previous quarters. Future geopolitical tensions could hamper this stability.
SECTOR FOCUS
Commercial
While the wider office market remains cautious, London is seeing renewed activity in high-quality refurbishments and new-build schemes. The life sciences subsector continues to thrive, with schemes such as Canary Wharf Group’s Grafton Way campus progressing. The construction of 55 Bishopsgate and the scheduled 2026 start of 99 Bishopsgate signal renewed momentum in the sector and continued confidence in London as a global business hub.
Data Centres
The data centres sector remains one of London’s most active, with both hyperscale and edge facilities in high demand. SEGRO’s Slough Trading Estate continues to expand, and Yondr Group is progressing its 100MW site in Havering. However, power constraints and planning resistance are emerging as key challenges.
Education
Despite falling school enrolments in some boroughs, the education sector remains active due to projects driven by safety requirements and building condition. RAAC remediation works are accelerating, with funding prioritised for London schools. Notably, Newham Collegiate Sixth Form Centre is undergoing a major upgrade.
Residential
The prime and build-to-rent markets remain relatively resilient. Traditional private sale schemes, however, particularly in Zones 2 to 4, face growing viability challenges as high interest rates, construction inflation and the emergence of house price affordability realignment weigh heavily on buyer confidence and new starts.
Barkers of Kensington
The former Barkers department store on London’s Kensington High Street is being transformed into a modern, highly sustainable mixed-use commercial building following an extensive refurbishment led by RLB.
Our experts are responsible for the cost and project management of the redevelopment and retrofit, which has preserved the historical character of the iconic art deco landmark while securing its long-term future as prime office and retail space.
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