Building resilience: Navigating the future of construction and property development

How businesses can adapt to a rapidly evolving environment

On March 26^th, we will be holding our 2025 Real Estate Conference at the Barbican Arts and Conference Centre – an afternoon of thought-provoking interactive workshops and networking that will explore practical tools and strategies to help businesses navigate the challenging economic landscape and lay strong foundations for the year ahead.

Here, Director Chris French, ESG Lead Alexis Ioannidis and Property Asset Manager Jack Lyons explore one of the key issues they’ll be discussing on the day: the challenges and opportunities facing the construction and property development sectors.  

The UK government has made no secret of its desire to get Britain building. Ambitious housebuilding targets, streamlined planning processes to unlock infrastructure projects and investment to connect communities with critical clean energy have all been pushed to the top of the agenda. This provides a tailwind for the sector. However, challenges clearly remain.

The construction PMI for February 2025 shows that new order volumes in the sector decreased to the greatest extent since May 2020, driven by caution and ‘squeezed budgets’ in an uncertain economic environment. Residential building was the weakest performing part of construction, with businesses citing weak demand as one of the biggest blockers.

Borrowing costs remain high and labour costs have escalated, in part caused by a shortage of skilled workers. And while the Building Safety Act is a positive change for the industry, creating safer places to live and work, it has also added to complexity and cost for developers, with firms forced to employ expensive consultants to ensure their projects comply. Sustainability is also an important factor, with changes to Building Regulations designed to improve environmental performance adding further to project cost.

This environment is making it increasingly important that construction and property development businesses focus on resilience and are making sure their growth strategies reflect the realities of this operating environment.

Chris French Director Restructuring Advisory

Unlocking investment

These conditions are making it increasingly important that construction businesses focus on resilience, and are making sure their growth strategies reflect the realities of this operating environment.

For example, amid global geopolitical uncertainty, we’d always advise businesses to undertake thorough supply chain due diligence to ensure that they aren’t overly exposed to potential shocks. This should include a review of suppliers and their own operational performance, as well as research into potential alternative suppliers to pivot to, should part of the supply chain fail.

And despite the challenges, there are positive trends that the sector can benefit from. The aforementioned housing and infrastructure push by the government is one.

And sustainability – despite bringing higher costs – is another. Occupiers are demanding more sustainable buildings to reduce operational cost. At the same time, institutional investors and real estate funds are placing greater scrutiny on the carbon footprint of their portfolios, increasingly directing capital towards projects that align with net-zero commitments. Many funds now require detailed emissions disclosures and embodied carbon assessments as part of their investment criteria, ensuring that assets contribute to long-term sustainability goals.

And funders recognise this, providing green financing and sustainability-linked loans, which offer not only financial benefits such as lower interest rates but are also becoming a key determinant for securing investment. Developers that integrate low-carbon materials, energy-efficient designs, and whole-life carbon assessments into their projects are more likely to access preferential funding and attract institutional capital.

The government is currently also consulting on implementing a green taxonomy, which would provide definitions of economic activities that are accepted as being environmentally sustainable. This is particularly relevant for investment funds seeking to align with sustainability benchmarks, as it would introduce a standardized framework for measuring and reporting emissions impact across real estate assets. This would help prevent greenwashing, help investors make informed choices, and mobilise more private capital for sustainable real estate investments. It’s a system that has already been adopted in other territories, including the EU, Japan, China, and Canada, and it could help provide a clear framework for developers to qualify for green financing, unlocking further investment.

Emerging opportunities

How can construction firms navigate this environment – managing risk, protecting value and delivering growth?

Together with Ross Faragher, a highly experienced interim director in the property sector and Ben Colling, Director Portfolio Management at Maslow Capital, we’ll be exploring this question in a workshop at the Real Estate Conference: ‘Building resilience: Navigating the future of Construction and Property Development’.

For further information on the event, check out the full agenda here.