20 December 2025
2026 Forecast: Where is the UK Property Market Heading?
As 2025 draws to a close, the UK property market stands at a turning point, and 2026 looks set to deliver cautious recovery and selective growth across commercial, residential, and mixed-use sectors.
🔹 Residential: Stabilisation, Not Boom
After a flat 2025, experts forecast modest house-price growth of around 2–4% in 2026 as affordability slowly improves through easing mortgage rates and wage growth.This modest growth, especially outside the overheated South East, offers opportunity for developers and investors with a long-term outlook.
🔹 Commercial Offices: Primed for Quality, Not Quantity
While office demand rebounds, supply remains tight, particularly for high-grade, ESG-compliant workspace.We expect continued rental growth for prime office space, driven by limited new supply and rising demand from businesses reshaping hybrid working strategies.
🔹 Industrial, Logistics & Lab Space: Strong Growth Ahead
Demand for logistics, data infrastructure and life-sciences labs remains robust. A surge in lab and industrial developments across key UK regions is on the horizon, helping absorb demand from e-commerce, biotech and data sectors.
🔹 Mixed-Use: Resilience Through Diversification
Mixed-use developments (combining residential, retail, leisure, and workspace) are increasingly attractive. They offer resilience against sector-specific slumps and cater to modern “live-work-play” lifestyles. Their flexibility and diversified income streams make them a smart bet in uncertain times.
✅ What This Means for Developers, Investors & Stakeholders
- Prioritise market-aligned locations and high-quality, sustainable assets.
- Incorporate flexible, mixed-use design to adapt to evolving demand.
- Manage cost exposure: with building cost inflation still a factor, early cost planning and value engineering remain critical.
- Be ready to respond to regulation & sustainability demands: ESG, retrofit potential, energy efficiency are all increasingly important to asset value.
At BAQUS we’re helping clients and developers navigate this changing landscape by combining cost-planning, procurement strategy and market insight to deliver resilient, future-proof projects. Here’s to a balanced, opportunity-filled 2026!