Welcome to This Week in Property, your go-to roundup of the latest developments shaping the UK construction and property sector. From signs of market recovery and record-breaking sales activity to sustainability policy shifts and regional investment trends, this week’s highlights reflect a cautiously optimistic outlook across the industry. Whether you’re an investor, developer, or industry professional, here’s what you need to know right now.

Market conditions showing improvement

The UK construction and property sectors are showing tentative signs of recovery according to the latest industry data. The Construction PMI remains in negative territory but is showing improvement, suggesting a gradual stabilisation of market conditions. This aligns with Glenigan’s optimistic outlook for the construction sector, hinting at improving conditions ahead.

May proved to be the busiest month for property sales agreements since 2021, indicating increasing market activity. Industry professionals noted that “May felt like a month where confidence picked up noticeably“, suggesting a potential turning point in market sentiment.

However, some challenges persist, as office construction has hit a 10-year low, reflecting ongoing shifts in commercial property demands. Additionally, housebuilders are still struggling with planning permissions, which have dropped year-on-year.

Corporate performance and strategic moves

Several major construction firms have reported their financial results. Mace remains on its growth track despite softer profits, while Mott MacDonald’s turnover has topped £2.5bn, demonstrating resilience in the engineering consultancy sector. Workspace Group has returned to profit despite headwinds, though Gleeson has issued a profit warning.

Significant acquisitions continue to reshape the industry landscape. Holcim has acquired a Gloucestershire asphalt plant, while Wienerberger has acquired Grafton’s MFP. In the hospitality sector, Brew Propco has snapped up 83 Welsh pubs.

The student accommodation market remains active with Barings buying a London PBSA scheme from CLS for £101m and a US private equity firm, Lone Star Real Estate Fund VII, making another significant UK student housing acquisition.

Sustainable construction and government policy

Sustainability continues to drive policy changes with the government pledging to unleash a ‘rooftop revolution‘ with compulsory solar panels for new homes under the Future Homes Standard this autumn. This represents a significant shift in building regulations that will impact developers nationwide.

Green technology implementation is gaining momentum across the construction sector. Kier’s energy trial has shown promising results, while Collins is turning to battery energy storage solutions. In an innovative approach, Alpine satellite dishes are being converted to solar arrays, demonstrating creative repurposing of existing infrastructure.

However, some industry groups are pushing back, with landlords claiming government EPC targets are ‘unachievable’, highlighting the tension between ambitious environmental goals and practical implementation concerns.

Regional development and regeneration projects

Several significant regional regeneration projects are advancing. Northampton’s Greyfriars regeneration is moving forward. In London, Wates has won a £110m Victoria Tower repairs contract, highlighting ongoing investment in historic infrastructure.

The Glasgow council has agreed on a policy to increase skyscrapers, potentially transforming the city’s skyline. Meanwhile, Olympia’s rebirth is set to become a significant investment magnet for London injecting over £600m into the London economy, reinforcing the capital’s attractiveness for property investment.

Regional investment opportunities are emerging, with Belfast being labeled as the best investment hotspot and the Scottish Borders seeing a buoyant market for investors and homebuyers.

Estate agency developments

The estate agency sector continues to evolve with Propertymark expanding its agency helpline to cover sales and all devolved nations, providing greater support for professionals across the UK.

Interesting developments include a rugby legend, Gareth Davies expanding his estate agency, Blackbear Property by opening a new branch in Swansea.

Industry professionals are also contemplating the future impact of technology, with discussions around how AI will impact estate agency in the UK, highlighting the sector’s awareness of upcoming technological disruption.

Investment trends and opportunities

For property investors, several opportunities are emerging. Stamp Duty exemptions are making probate properties an appealing investment.

Financial analysts at Peel Hunt are predicting a 36% rise in housebuilders’ income under the best of three performance scenarios, offering a potentially optimistic outlook for residential development investments.

In Wales, the second home tax is funding first-time buyer loans, representing an interesting policy approach to balancing investment property ownership with support for local buyers.

The construction and property sectors are showing early signs of recovery amid continuing challenges. Sustainability initiatives, regional regeneration projects, and evolving business models are reshaping the industry landscape, creating both opportunities and challenges for stakeholders across the market.

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