INSIGHTS
Construction Market Intelligence
UK Edition
Q3 2025
Scotland
In the short term, the outlook for the Scottish construction industry is mixed. While some sectors are experiencing growth, particularly the education, residential and infrastructure sectors, others like healthcare are being held back by a lack of investment.
There is a lot of activity in Edinburgh where several major construction projects are underway, including Leamington Square, New Town Quarter, and the redevelopment of iconic buildings such as Jenners Department Store and Granton Station.
Everyone in construction will welcome initiatives from the Scottish Government to support the industry through closer collaboration in areas of public procurement, sustainable business practices, and addressing skills gaps, which remains a key challenge.
MARKET CONDITIONS & PIPELINE
Significant investment driving strong growth in key sectors
Scotland’s construction market remains strong in terms of growth and pipeline, with the education, residential and infrastructure sectors performing well in 2025 in respect of new opportunities and project starts.
The residential sector is busy with headline developments, notably Western Villages in Edinburgh, which is set to become Scotland’s largest operational net zero housing development. Many of the new developments in this sector are incorporating sustainable and net zero principles. There is a strong focus on building timber-framed homes in Scotland.
The industry is seeing significant investment in public sector projects. There is also growing demand for high-quality, modern commercial and industrial spaces. Overall, the project pipeline for the next 12 months remains fairly positive. While some confidence has returned to the sector, however, it is not yet back to pre-pandemic levels.
Contractors in Scotland are actively pricing projects up to around the value of £5m. Above this value, interest from Tier 1 contractors declines. Views on single-stage tendering remain mixed with some contractors open to using this method and others who continue to avoid it altogether.
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: SCOTLAND
▲ 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 are forecast to rise in line with general inflation, with prices increasing steadily from current levels but not drastically as in previous years.
▉ RLB Scotland
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors' range (High & Low)
INPUT COSTS
- The recent hike in National Insurance contributions has not yet produced a sharp rise in labour costs, which was a previous worry.
- There has been an increase in the cost of building materials, including timber, cladding, insulation, and metal-based and cement-based products.
- Construction input costs in Scotland increased by an average of 4.65% in the year to the second quarter of 2025 and by 1.25% on the quarter (source: BCIS).
SECTOR FOCUS
Education
Construction commenced in the quarter on the University of Glasgow’s £300m Keystone Building, a landmark teaching and research facility. Located within St Mungo’s Square, the building is due for completion in 2028/29 and represents a key development in the University’s efforts to enhance its educational infrastructure and sustainability initiatives.
Infrastructure
Cerulean Winds is leading the development of the UK’s offshore renewables grid. This includes the 1GW Aspen project, one of the world’s largest offshore wind farms in the North Sea, which includes the construction of the Ardersier Energy Transition Facility in Scotland. Another significant ongoing infrastructure project is Eastern Green Link 2, a 505km electricity superhighway which will enable the transfer of power from Scotland to England (and vice versa) via a subsea cable.
The Macallan Distillery
RLB’s specification consultants supported the delivery of The Macallan Distillery and Visitor Experience, a project which won the RIBA Award for Scotland 2019 and was shortlisted for the RIBA Stirling Prize in the same year.
The Macallan is one of the most famous whisky makers in the world and its distillery, with a spectacular rolling roof that reflects the local landscape, offers a range of experiences for visitors.
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