Some of the South East’s major developments are helping support levels of activity in the construction markets in the region according to research by RLB.

The construction and property management consultancy and Thames Tap partner has published its Construction Market Intelligence for Q3, 2025 and says work on projects, such as Heathrow Airport expansion and associated upgrades as well as plans across the Oxford-Cambridge Arc, are helping the market remain positive and resilient.

While the broader UK economic and political backdrop is dampening confidence among investors and developers, market activity remains reasonable and RLB expects that to continue.

However, challenging conditions persist in the area of planning particularly for new build high risk residential buildings.

The research shows contractors are becoming more selective about the opportunities they pursue and many tier one contractors are favouring negotiated, or two-stage tendering to better manage risk and protect margins.

RLB expects the upward trend in tender price inflation to continue over the near term.  Skills shortages and labour availability remain the dominant drivers of cost pressure across trades, while materials availability and pricing are generally less volatile than in previous years.

A sector focus reveals:

Commercial

Market sentiment remains cautious in the commercial sector. Performance varies across regional business parks, and developers remain risk-adverse on speculative schemes, many of which are on hold.  There is ongoing evidence of office-to-residential conversions in key towns and cities

Education

Feasibility studies increasingly favour refurbishment and improvement of existing facilities as estates are rationalised and consolidated. Nevertheless, several key clients are progressing expansion projects.

Healthcare

Sentiment across the healthcare sector is improving, supported by increased funding to the New Hospitals Programme. Local NHS trusts are reviewing estates to rationalise and improve existing facilities, creating new opportunities.

Residential

Demand in the residential sector remains high, but viability and delivery are challenged by planning bottlenecks, building safety gateway approvals, interest rates, property taxation and access to funding.

Michael Righton, partner at RLB South East (pictured), said: “Construction costs are relatively stable but remain on an upward trajectory for the foreseeable future.

“Material pricing is notably less volatile than in recent years, but labour availability and cost continue to be the key pressure points. Across the tiers, contractors are highly risk adverse and are seeking to mitigate exposure through negotiated or two-stage tender processes.”

The report can be seen here.

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