The latest regional market analysis by independent built environment consultancy Rider Levett Bucknall (RLB UK) says improving economic conditions, including the prospect of interest rate cuts, could help strengthen investor confidence and support new development.

This is despite continuing sector challenges such as skilled labour shortages, which will require continued collaboration between government and industry to attract new entrants into the sector while retaining experienced workers, rising material costs and complex planning procedures.

Martin McConnell, an Edinburgh-based RLB UK partner, said: “The Scottish construction market is entering the year with cautious optimism. A strong pipeline of projects and increasing focus on sustainability and energy infrastructure are expected to support rising workloads over the coming years.

“Across Scotland, the market continues to prioritise refurbishment and repurposing of existing buildings over new-build developments. This shift is being driven both by environmental considerations, particularly the need to reduce embodied carbon, and by economic factors as developers seek lower-risk investment options in a challenging market.”

Contractors continue to favour procurement approaches that reduce risk, including two-stage tendering, negotiated contracts and framework agreements, according to RLB UK, with currently little appetite among contractors for single-stage competitive tendering.

Infrastructure remains one of the strongest sectors in Scotland’s construction market, with significant investment being driven by energy regeneration projects and improvements to energy distribution networks.

Demand for commercial property has also begun to strengthen, with increasing occupier demand for both office and industrial space reported towards the end of 2025. 

By contrast, the retail sector continues to face challenges as demand for retail space declines and rental expectations adjust to changing consumer behaviour. 

RLB’s Tender Price Index (TPI) forecast for 2026 for Scotland is 3.5% compared with a forecast of 3.45% across the UK.