South East construction market shows signs of confidence improving

The construction sector in the South East is showing signs that confidence is improving against a challenging economic and political situation in the UK and wider geopolitical environment, according to the latest construction market intelligence from construction and property management consultant, Rider Levett Bucknall (RLB).

Sectors supported by public investment, infrastructure spending and long-term structural demand are particularly seeing signs of growth including AMP8 investment programmes, NHS estate requirements and MoD infrastructure projects finds RLB’s latest market intelligence report.

Data centres, life sciences, healthcare, defence and utilities continue to underpin activity across much of the region, especially the Thames Valley and M4 corridor, while residential development and speculative commercial schemes remain constrained by affordability and viability pressures.

Investors and developers remain cautious

The latest findings show that while clients are increasingly progressing projects through feasibility, planning and procurement stages, the conversion of opportunities into site starts remains slower than historic norms as funding, viability and affordability considerations continue to influence decision-making.

Tender prices

Tender price inflation in the South East has moderated significantly compared with the conditions experienced between 2021 and 2023. Competitive market conditions, improved material availability and softer levels of private-sector demand continue to provide downward pressure on pricing.

RLB analysis suggests that contractors are increasingly willing to pursue opportunities to maintain pipeline visibility and secure future workload, particularly in residential, commercial and general building sectors, most selective regarding risk transfer, procurement route and contract conditions.

Comments

Mike Righton, partner at RLB, said: “Looking ahead, we expect market conditions to strengthen gradually rather than recover sharply across the region.

“Public sector investment, defence expenditure, utilities upgrades, housing delivery initiatives and continued growth in digital infrastructure are all expected to support activity through 2027, although economic uncertainty and financing costs will continue to influence investment decisions.”

Report

Click here to read RLB’s full Construction Market Intelligence Q3 report.