INSIGHTS
Construction Market Intelligence
UK Edition
Q3 2025
South East
Construction activity across Reading and the wider South East remains positive despite some ongoing industry challenges. The current political environment in the UK is not helping with confidence across various client organisation types and this is expected to continue for some time.
Construction costs are relatively stable but are expected to maintain the ongoing upward trajectory for the foreseeable future. The availability and costs of materials are less volatile. The cost of labour across the supply chain is still a pressure point.
Contractors across the tiers continue to be highly risk-averse and keen to mitigate risk exposure through either negotiated or two-stage tender processes.
MARKET CONDITIONS & PIPELINE
Steady pipeline of major projects helps maintain construction sector’s resilience
The overall construction market across Reading and the wider South East has continued to show resilience. Major programmes of work are still coming through the development pipeline across a diverse range of sectors, including schemes such as the expansion of Heathrow Airport and associated infrastructure upgrades, as well as plans across the Oxford-Cambridge Arc.
While the UK economic and political backdrop is not improving confidence among investors and developers, there is still a reasonable level of market activity and this is expected to continue.
The planning arena remains challenging and continues to contribute to projects stagnating throughout the life cycle, particularly for new-build high-risk residential buildings.
Feedback suggests contractors are broadly becoming more selective about the work they bid for. Order books appear to be full to an extent that it is often difficult to maintain contractor interest throughout the whole tender process.
Many Tier 1 contractors are opting for either negotiated or two-stage tendering to improve risk management/mitigation and the chances of securing healthier profit margins.
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: SOUTH EAST
▲ 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
- The upward trend in tender price inflation continues and is expected to do so for the foreseeable future.
▉ RLB South East
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors' range (High & Low)
INPUT COSTS
- Skills shortages and the supply of labour across trades continue to be a dominant factor impacting the dynamics of supply and demand and therefore price sensitivities.
SECTOR FOCUS
Commercial
The commercial market remains cautious, with a mixed picture in regional markets and differing levels of success across some of the business parks. Developers are still being very risk-averse regarding speculative developments, many of which are still being kept on hold. There is ongoing evidence across key towns and cities of existing commercial stock being identified for conversion to residential accommodation.
Education
This sector has seen a pivot with many new project feasibilities tending towards the refurbishment and improvement of existing facilities, as the sector faces incentives to rationalise and consolidate. Nevertheless, a number of key clients are pushing forwards with expansion plans.
Healthcare
There is growing positive sentiment across the sector due to the increase in funding to the New Hospital Programme. Local NHS Trusts are now reviewing their estates to rationalise and improve existing facilities, creating new opportunities for sector activity.
Residential
Demand in the residential sector remains high but many complexities are impacting on the viability and delivery of schemes, primarily, planning bottlenecks, Building Safety Act approvals, interest rates, property taxation and access to funding.
Riverlabs
Riverlabs, a 28-acre life sciences campus in Ware, Hertfordshire, forms a vibrant hub within the 'Golden Triangle'. Comprising three phases of development, the campus offers state-of-the-art laboratory spaces with a focus on sustainability, targeting an impressive 75% carbon reduction.
Delivering comprehensive cost planning that spans from light touch of existing builds to detailed estimates for full refurbishment of a fully fitted lab, the RLB team also added value by incorporating utilities cost management and project and programme management services.
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