Midlands construction market poised for growth, driven by private housing boom – report

The latest Construction Market Intelligence report from Midlands-based construction and property management consultant, Rider Levett Bucknall (RLB UK) has forecasted a positive outlook for the region’s construction sector, with private housing emerging as the fastest-growing sector. 

The report mentioned that Birmingham city centre is undergoing multiple high-rise commercial and residential developments as part of the second city’s ‘Our Future City’ plan for expansion.

Coventry is also experiencing major regeneration projects, a focus on affordable and sustainable housing, and investments in skills and infrastructure.

However, sentiment is cautiously optimistic in the West Midlands commercial sector, with demand steady but tempered by economic conditions.

The East Midlands is benefitting from growth in the logistics & manufacturing and transport sectors, buoyed by government support for East Midlands Freeport and Midland Main Line.

Despite these positive indicators, the industrial activity saw a decline in activity from the previous year, with the anticipated uplift not yet realised.

Retail projects remain a continued challenge and the sector is expected tougher times ahead with the increases to National Insurance and the National Minimum Wage. 

There is a positive trend in new project starts, with a reported 33 per cent increase in Q1 2025, but this growth is not consistent across all sectors.

Rising material and labour costs and supply chain challenges may limit the volume of construction.

Developers remain optimistic about investment opportunities in the region with the Midlands’ strategic location and robust infrastructure continuing to make it an attractive destination for investment.

 RLB’s tender price forecast for the Midlands over the next 12 months predicts a rise of approximately 3 per cent to 4 per cent, with similar annual increases expected thereafter. 

Pricing remains stable with no major shocks in the period. Typical annual increases have been seen in several areas, largely driven by an increase in labour costs.

Despite economic uncertainties, there is steady demand for high-quality office spaces, driven by businesses seeking to modernise their work environments and attract top talent.

The Midlands’ logistics and manufacturing is thriving, according to the report, driven by its strategic location and robust infrastructure, with 90 per cent of the UK population reachable within four hours.

The region’s residential sector is set to benefit from strong demand, attractive investment opportunities and a focus on sustainability, making it a key area for growth in the UK’s property market.

Birmingham, Nottingham and Coventry are seeing a rise in demand for housing, fuelled by economic growth, infrastructure investments and ongoing regeneration projects.

The sports sector is driving regeneration and economic development in the region.

These include a transformative £100m investment by US company Knighthead to create the new Sports Quarter in East Birmingham, providing a 60,000-seater stadium, sporting facilities, and commercial and residential spaces.

Joseph Theodoulou, senior cost manager of RLB Midlands, said: “Tender price indices in the Midlands are set to marginally exceed inflation as previous costs settle down overall.

“Both short-term and long-term growth is forecasted, driven by businesses relocating from London’s high-rent market and rapid expansion of the technology sector.

“With the rise in digital technology and AI, large corporations are having a ‘race to the top’, which is driving an increasing demand for MEP equipment and grid power.

“Coupled with labour shortages in UK manufacturing, this is pushing prices up and increasing lead-in times for critical equipment. 

“Lack of infrastructure has long proved to be a blocker to development opportunities. With rising demand for grid connections, the government must hasten the delivery of new infrastructure to attract increased private investment.”

For RLB’s full Construction Market Intelligence Q1 report, please click here.