Development Sector Optimistic Yet Constrained By Market Pressures

New research reveals that the UK development industry is entering 2026 with cautious optimism but is still held back by deep-rooted staffing challenges that are slowing delivery and squeezing project viability. The Development Index – produced by real estate and construction hiring specialist, Cobalt Recruitment – captures the current challenges, along with the opportunities and pressures shaping the year ahead.

A sector stabilising, but still under strain

Drawing on interviews with industry leaders across the UK’s leading property developers, housebuilders, REITs, and investment firms, the report reveals unsurprisingly low sentiment in the market in 2025, but a quiet confidence across the development ecosystem going into 2026, with slow signs of improvement emerging.

Softening finance terms, potential further interest rate reductions, and anticipated policy clarity, particularly around the National Planning Policy Framework, are helping to rebuild sentiment. Yet the challenges remain significant. Increased planning delays, staff shortages, constrained project viability, a shortage of viable schemes for lenders, rising cost pressures, and an acute lack of end occupiers and buyers, are all taking their toll on the market.

Skills shortages remain a barrier to delivery

While there is cautious optimism, this is at risk of being destabilised by growing skills shortages. The Development Index highlights a sector still grappling with evolving talent gaps across certain skills and locations in planning, land, development, technical, design, commercial, and delivery roles, coupled with a challenging market environment.

Employers are increasingly seeking professionals who combine technical knowledge with commercial acumen, ESG fluency, and digital literacy, especially in AI-enabled appraisal and design tools.

With the continued shift toward refurbishment and regeneration projects, which now represent more than four fifths of new schemes underway, the demand for professionals with skills tailored to complex refurbishment, sustainability standards and evolving regulatory frameworks, is also set to increase.

Commenting on the report, Maria Sinclair, Managing Director of Cobalt UK, said:

“The Development Index highlights a UK development market that remains ambitious but increasingly constrained in its ability to deliver. Economic pressures, planning complexity and ongoing skills shortages are emerging as significant risks to progress across the sector."

"Moving from ambition to delivery will require a renewed focus on execution, with investment in skills, stronger development teams and access to the right expertise becoming critical to navigating uncertainty and unlocking growth."

"At Cobalt, we see first-hand how the availability of experienced professionals can accelerate projects and support delivery. The Index is designed to support that discussion, setting out the key pressure points and what the industry must address to move forward with confidence.”