The Outlook
for 2026
The Shape of the Property Market in 2026
Residential Sales Market
Two Minute Takeaways
Recent efforts by the Financial Conduct Authority to encourage lenders to refine affordability assessments are expected to increase access to mortgage finance, and expected rate cuts should improve affordability in 2026. This, together with greater economic and political stability should support first‑time buyers and boost activity. Planned government reforms aim to speed up transactions, while long‑term market health depends on tackling persistent supply shortages and progressing initiatives to increase new home delivery.
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Residential Sales Markets
Farmland Market
Rural Estate Planning
New Build Sector
Later Living
Residential Sales Markets
Infrastructure - Power & Water
London Offices
Capital Markets
Science & Tech
Later
Living
New Build Sector
Rural Estate Strategic Planning
Farmland
Market
Infrastructure Power & Water
London Offices
Capital Markets
Science & Technology
New Build Developments
The positive impact of Artificial Intelligence
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Residential Market Sales
Later Living
New Build Sector
Rural Estate Strategic Planning
Farmland Market
Infrastructure - Power & Water
London Offices
Capital Markets
Science & Technology
Two Minute Takeaways
The Positive Impact of A.I
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With the key ingredients now in place to attract inward investment, it is no surprise that the artificial intelligence revolution is beginning to make its presence felt in the London office market.
The more near-term impact on the market could be the shape of mortgage availability and rates in the next 12 months.
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The UK requires the
delivery of 30,000 to 50,000 Later Living homes per annum to meet demand.
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The profitability and speed of development are some of the key challenges in the sector at present.
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The year ahead is set to
be pivotal for rural estate
planning, underpinned
by upcoming changes to
the Inheritance Tax (IHT)
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A steady start to the year gave way to a softening of values in the second quarter, reversing a five-year upward trend.
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The UK’s electricity grid connection process is undergoing transformative
reform to support the transition to net-zero.
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London enters 2026 with
tightening supply, early
occupier engagement, and an increasing trend towards pre-lets.
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We expect the UK commercial property capital markets to move into a phase of stabilisation and gradual recovery through 2026
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The UK science and tech
sectors are well placed for
continued growth in 2026, reinforcing the UK’s position
as a global innovation leader.
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The UK’s ageing population is driving strong demand for Later Living housing, yet supply remains far below need. With a finite number of higher-end renters attracted to amenity-led multi-family housing schemes, the Later Living market offers an alternative opportunity for investors wanting to focus on premium rental product. It is hugely undersupplied and capital-rich, yet attracts a premium for amenity and service, with demand forecast to grow over the next decade.
Later Living and Living Sectors
The new‑build sector faces major viability pressures from high construction costs, increased scrutiny from lenders, a reduced appetite for Affordable Housing commitments, planning delays, the financial burden of Community Infrastructure Levy payments and the introduction of Biodiversity Net Gain, as well as a slowing sales market.
Yet opportunities remain through the rising demand for sustainable homes, and a continuing flow of residential development opportunities.
Farmland Market
The farmland market softened in 2025 amid inheritance tax uncertainty, a lack of clarity over the Sustainable Farming Incentive, average harvests and tighter margins. However, December’s announcement on raising the proposed APR threshold from £1m to £2.5 million delivered some welcome stability.
We expect well-located commercial farms to maintain premium values in 2026, whilst poorer-quality units are likely to face thinner demand and price corrections where local interest is limited.
The increase to the proposed threshold for APR and BPR to £2.5m in late December 2025, has provided stability to many family farms and rural businesses. However, the value of essential assets required to run modern farming and estate businesses can accumulate quickly, and so careful forward planning is still important.
2026 will demand proactive, strategic thinking. For those yet to begin the process, the coming year will be crucial for reviewing estate structures and assessing current exposure to IHT.
Rural Estate Strategic Planning
2026 looks set to be a pivotal year for accelerating the utility infrastructure provision required to unlock housing and meet the growing demand for power.
Delivering the Great Grid Upgrade is essential, and the Gate 2 reforms are expected to significantly unlock grid access for viable clean energy projects.
Cost control and a “do more with less” mantra will be defining characteristics of 2026, meaning increasing opportunities for the private sector to fund and deliver infrastructure.
Infrastructure: Power and Water
London’s office market enters 2026 with declining grade A availability and increasing pre‑letting activity, and we expect the volume of uncommitted pipeline space reaching the market to shrink further.
Occupier demand will remain subdued in early 2026, before strengthening during the second half of the year as economic conditions improve and AI‑sector growth boosts take‑up.
London Office Market
UK commercial property markets should see gradual recovery through 2026 rather than a sharp rebound in activity. We are seeing a gradual narrowing of the pricing gap between buyers and sellers, with consequent improving pricing clarity, and this should mean a higher proportion of deals reaching completion.
Debt markets are also becoming more constructive, with borrowing costs becoming increasingly attractive, and UK high street banks once again active lenders. Investor focus has shifted from interest rates towards asset quality, income durability, capital expenditure requirements and long-term relevance.
Commercial Property Capital Markets
The UK’s science and tech sectors are set for strong growth in 2026, supported by government commitment, new development schemes and expanding regional clusters.
The defence sectors have become a key area of government focus, with global events prompting a pledge to significantly increase defence spending. We have seen an impact across sectors from advanced materials and engineering to cybersecurity and advanced manufacturing, and this presents a strong growth opportunity for the UK’s R&D infrastructure.
Science and Technology
Although the long-term impact of artificial intelligence (AI) on service sector jobs is still uncertain, evidence is growing that AI is replacing lower skilled repetitive jobs in some areas of the banking, accountancy and legal professions. However, London’s status as a global centre of excellence for the development of AI technologies means it is benefitting from rapid AI-sector growth, as evidenced by major US firms Anthropic and Databricks currently seeking significantly larger footprints. Therefore, London is likely to be a net beneficiary of the unfolding AI revolution this year.
The Positive Impact of Artificial Intelligence
During the last quarter of 2025 it was reported that American AI firm Anthropic is seeking 200,000 sq ft as part of its global strategy for growth - the company currently occupies just 15,000 sq ft in the City of London. In a further boost from the AI sector, it was revealed in November that US company Databricks is in discussions to lease circa 100,000 sq ft at Derwent’s “Network” building in Fitzrovia, W1 – more than triple the quantum of space that the business currently occupies in London.
Although the full long-term impact of artificial intelligence on service sector jobs is still uncertain, evidence is growing that AI is replacing lower skilled repetitive jobs in some areas of the banking, accountancy and legal professions.
Because of its status as a global centre of excellence for the development of AI technologies, London is likely to be a net beneficiary of the unfolding AI revolution this year, underpinning a slow but confident recovery in office occupational demand from the second quarter.
020 7518 3301
Dan Francis
Head of Research
Email
020 7518 3301
Dan Francis
Head of Research
Email
01223 326 826
Colin Brown
Head of Planning & Development
Email
0121 389 0409
Mark Hall-Digweed
Head of Infrastructure
Email
020 7518 3225
Alexandra Houghton
Head of Commercial
Email
01223 346 609
Tim Jones
Head of Rural
Email
020 7518 3234
Lisa Simon
Head of Residential
Email
Residential Market Sales
Later Living
New Build Sector
Rural Estate Strategic Planning
Farmland Market
Infrastructure - Power & Water
London Offices
Capital Markets
Science & Technology
Two Minute Takeaways
The positive impact of A.I
Contact Us
Residential Market Sales
Later Living
New Build Sector
Rural Estate Planning
Farmland Market
Infrastructure - Power & Water
London Offices
Capital Markets
Science & Technology
Two Minute Takeaways
The positive impact of A.I
Contact Us
Residential Market Sales
Later Living
New Build Sector
Rural Estate Planning
Farmland Market
Infrastructure - Power & Water
London Offices
Capital Markets
Science & Technology
Two Minute Takeaways
The positive impact of A.I
Contact Us
Residential Market Sales
Later Living
New Build Sector
Rural Estate Planning
Farmland Market
Infrastructure - Power & Water
London Offices
Capital Markets
Science & Technology
Two Minute Takeaways
The positive impact of A.I
Contact Us
Residential Market Sales
Later Living
New Build Sector
Rural Estate Strategic Planning
Farmland Market
Infrastructure - Power & Water
London Offices
Capital Markets
Science & Technology
Two Minute Takeaways
The positive impact of A.I
Contact Us
Residential Market Sales
Later Living
New Build Sector
Rural Estate Strategic Planning
Farmland Market
Infrastructure - Power & Water
London Offices
Capital Markets
Science & Technology
Two Minute Takeaways
The positive impact of A.I
Contact Us
Residential Market Sales
Later Living
New Build Sector
Rural Estate Strategic Planning
Farmland Market
Infrastructure - Power & Water
London Offices
Capital Markets
Science & Technology
Two Minute Takeaways
The positive impact of A.I
Contact Us
