Interest rate relief, planning reform, and sustainability will shape the sector’s rebound.
We spoke with MRG’s Christopher Mackenzie, our UK real estate specialist in asset management, investment, leasing, and development, about the outlook for the UK property market in 2026 and the factors driving a cautious recovery.
As 2026 begins, property and construction leaders are cautiously optimistic about the year ahead. Many expect falling interest rates to unlock liquidity and spur investment after a period of high costs and stalled projects.
Planning and regulatory clarity remain critical. Melanie Leech, Chief Executive of the British Property Federation, notes: “Unlocking development through planning reform and restoring investor confidence will be key to driving growth this year.”
Market performance will be uneven. Prime sectors such as logistics, data centres, life sciences, and high-quality offices are expected to outperform, while secondary assets may struggle. Living sectors—PBSA, build-to-rent, and co-living—are seen as growth areas, though cost pressures and regulatory risks remain.
Sustainability continues to shape occupier decisions, driving a “flight to quality” toward energy-efficient assets. Julie Ennis of CBRE highlights this trend: “Energy-efficient, future-proofed buildings will command premiums as occupiers and investors prioritise ESG.”
Flexible workspace is also expected to gain traction, particularly among SMEs seeking cost-effective solutions in uncertain economic conditions.
These views are supported by the activities we have seen at MRG over the last year. We have been working with developers who have been sitting on potential projects for a while and are now looking to move forward with their plans. We have also been consistently busy in the flexible workspace market, as that area continues to grow, with more landlords introducing it to their portfolios and new operators entering the market.
In short, 2026 looks set to be a year of measured recovery and strategic repositioning, with success hinging on regulatory reform, sustainability, and a focus on prime, resilient sectors.
Source:
https://benews.co.uk/insight/26-for-26-industry-leaders-deliver-their-predictions-for-the-year-ahead-part-one/
For more information about senior UK Real Estate appointments, contact Christopher Mackenzie.