The second quarter of 2026 has seen increased activity across a range of property sectors, but the drivers are not universal. Residential developers are reshaping schemes to satisfy cautious capital and regulatory requirements. Investors with strong balance sheets are becoming more selective and pursuing opportunities from a position of strength. Occupiers continue to make considered decisions around cost, flexibility and performance, while foodstores remain attractive thanks to resilient trading fundamentals.
What links these markets is not a widespread return of confidence, but a growing willingness to act where there is clear evidence of demand, funding support and a credible route to delivery. Funding remains selective, viability continues to dictate decision-making and projects need a clearer route to implementation than they did during previous market cycles. Appetite is returning, but it remains targeted rather than universal.
At the same time, Government intervention is becoming more visible at both national and strategic levels, creating a clearer direction of travel for growth. The publication of the Draft London Plan is one example of this, signalling a more pragmatic, pro-growth approach to housing delivery, density and strategic development, while reinforcing that delivery will still depend on viability, infrastructure and local implementation.
The policy environment is more supportive than it has been for several years, with national reform and stronger central Government intervention creating a clearer pro-growth framework at both national and strategic levels.
London provides a useful illustration of this shift. The Draft London Plan reinforces the Government’s wider growth agenda through a stronger emphasis on housing delivery, brownfield optimisation and selective Green Belt release. However, as elsewhere in the country, policy ambition alone will not determine outcomes. Viability, infrastructure provision and borough-level decision-making will continue to shape what is ultimately delivered.
That consistency is not yet reflected locally. Political change, officer capacity constraints and committee dynamics are creating a more uneven planning environment, making outcomes less predictable and increasing the importance of local strategy.
The implication is that planning strategy, viability and delivery need to be aligned from the outset. Burr Street in Luton illustrates this: originally identified for 63 homes, the scheme progressed to consent for 414 units through refusal, appeal and revised applications, with success ultimately driven by sustained alignment rather than a single policy shift.
Development activity is improving, but funding conditions remain risk-averse and are directly shaping what comes forward. Developers are increasingly focusing product, structure and delivery routes around what capital will support.
This is showing up in more pragmatic product decisions: schemes designed to fall below key Building Safety Regulator thresholds, simpler delivery models, and a sharper focus on market sectors where demand is clearer. Hotels are seeing renewed attention, alongside selected living-led products.
Viability remains critical. Few schemes are progressing on original assumptions; instead, they are being restructured through revised phasing, tenure flexibility, lower-risk product choices and partnership-led approaches.
Funding conversations reflect the same discipline. Lenders and partners are looking beyond GDV, loan-to-cost and exit value to test whether the planning position is robust, obligations are manageable and the programme is credible.
In practice, sponsors need to address planning, viability and delivery risk much earlier. Activity is improving, but only where schemes can show a credible route to implementation.
Occupiers continue to balance cost management with the need to attract and retain talent through high quality workplace environments. Demand remains strongest for best-in-class space, with flexibility, employee experience and long-term workplace performance increasingly influencing real estate decisions. For many businesses, workplace strategy is now being evaluated alongside wider operational and financial performance, with real estate decisions increasingly linked to productivity, talent attraction and organisational flexibility.
Recent activity, including Hargreaves Lansdown’s expansion, demonstrates that occupiers are prepared to commit to additional space where quality, location and business needs align.
While decision-making remains measured, organisations are increasingly looking for property solutions that can support growth, strengthen workplace culture and deliver clear business value.
At the same time, flexible workspace has evolved into a broader spectrum of managed, serviced and enterprise-grade solutions, reflecting an increased focus on adaptability, employee experience and brand identity.
The arrival of Head of Flex, Jordan Saleh, further reinforces this focus, recognising that occupier strategy is becoming more complex and more directly linked to overall business performance.
Foodstores remain one of the market’s most resilient sectors, supported by secure income and non-discretionary demand. Investor appetite for prime assets remains strong, with Waitrose in Barnet reflecting continued conviction in well-located, well-performing stores.
However, cost inflation, wage pressure and price-sensitive consumers are increasing scrutiny of trading performance, catchment demographics and long-term resilience.
The sector remains attractive, but pricing is now more closely linked to asset-level performance rather than simply defensive characteristics.
Investment and funding: selective capital and a more polarised market
Capital is returning, but the market is increasingly split between those with access to funding and those without. Lenders remain focused on clear delivery pathways, limited execution risk and strong fundamentals, meaning appetite is highly selective rather than broadly confident.
New UK commercial real estate lending reached £52.7bn in 2025, its highest level in a decade, with UK banks and non-bank lenders increasing activity. Pricing is also returning for stronger assets, particularly on refinance opportunities.
However, recovery remains cautious. Much of the activity is refinance-led, while Colliers’ Q2 2026 research points to investment volumes below both the previous year and the five-year average, underlining continued caution on deployment.
Well-capitalised investors and developers are more active, but also more choosy. Those with stronger balance sheets are able to take a longer-term view, seek dominant positions and move decisively where the opportunity is high quality and the risk is understood.
This is creating a more polarised landscape: developers without flexible capital are adapting product and structure, while stronger sponsors can be more opportunistic and selective about where they deploy resource.
A notable Q2 shift is the point at which disciplines are being brought together. Planning, funding, development and occupier considerations are increasingly being aligned at the outset rather than sequentially, with market demand and end-user requirements informing business plans far earlier in the development cycle.
This reflects both constraint and opportunity. In a selective market, misalignment is exposed quickly, while well-structured schemes can progress with greater certainty. Registered providers are also becoming more active and more proactive where they have access to funding.
Funding conditions reinforce this. The strongest cases are those where the planning story, commercial assumptions, delivery route and exit strategy are clearly connected. Integration is no longer optional; it is increasingly required to unlock delivery.
The direction of travel remains broadly positive, but it is appetite rather than confidence that is returning. Government intervention is more pronounced, policy is more clearly aligned with growth and market participants are looking for opportunities, but only where risk can be managed.
Emerging policy, including the Draft London Plan, points towards greater support for higher-density living, Build-to-Rent, PBSA and other professionally managed housing products, provided schemes can demonstrate deliverability and long-term viability.
The constraints remain familiar: risk-averse funding, local political variation and viability. These will continue to shape activity through the second half of the year and will determine which schemes are capable of moving forward.
Build-to-rent is expected to make real headway, alongside PBSA and co-living, where demand is clear and local authorities are pragmatic. Private housing is likely to be more focused on greenfield opportunities, public-sector-led sites and flatted schemes under six storeys.
Registered providers are also expected to be more visible in the market, particularly where access to funding allows them to take a proactive position rather than simply respond to opportunities as they arise.
For occupiers, the second half of the year is likely to remain focused on quality, flexibility and long-term performance, with decisions shaped by both cost discipline and the need to support business change.
Even so, the schemes most likely to benefit will be those with planning certainty, realistic assumptions, flexible delivery models and clear evidence of demand.
Across residential development, investment, occupier markets and operational real estate, activity is increasing. However, this is not a return to unconstrained growth or broad-based confidence.
Decisions remain disciplined. Capital remains selective. Delivery remains complex.
The projects, assets and strategies most likely to succeed are those with clear demand, well understood occupier requirements, planning certainty, realistic assumptions, credible sponsors and a deliverable funding strategy. In today’s market, confidence alone is not enough. Deliverability remains the test.
Newsteer’s #OurSteer 2026 authors:
Alastair Crowdy, Managing Director
Ross Bettridge, Director, Development Consultancy
Jessica Wilson, Director, Planning
Another year at UKREiiF and another reminder that, across the property and regeneration sector, the conversation has shifted from ambition alone to deliverability.
The optimism and energy across Leeds remained strong throughout the week – despite the weather (!) – but many of the most interesting discussions centred on a shared challenge: how do we continue to unlock growth, regeneration and housing delivery in an environment where viability remains under sustained pressure?
That theme came through consistently across panel sessions, client conversations and wider industry discussions.
One of the standout moments for Newsteer was Geena Bains speaking at a regeneration-focused “Opportunity Hounslow” session, where she shared practical insights from our work at Convent Way in Hounslow.
Her reflections were refreshingly honest and closely aligned with the realities many projects are currently facing. Viability pressures, policy constraints and wider macroeconomic uncertainty continue to place significant strain on delivery, particularly in London where cost inflation and stagnant sales values are affecting confidence across the market.
Yet while the challenges are well understood, Geena’s central message was clear: successful regeneration still depends on confidence, collaboration and trust.
In increasingly complex projects, credibility matters. Residents, local authorities, developers, funders and delivery partners all need confidence in both the vision and the route to delivery. Future-proofing schemes, establishing the right partnerships and maintaining a relentless focus on outcomes are becoming just as important as the technical and financial aspects of development itself.
Newsteer is supporting the regeneration of Convent Way, providing advice on procurement, land assembly, viability and business case development as part of the wider delivery team.
The wider policy and planning discussions across UKREiiF reinforced many of the same themes.
Speaking at the “Get London Building Again” session, Deputy Mayor for Housing and Residential Development Tom Copley acknowledged that viability and macroeconomic shocks are currently being felt particularly acutely in London. He also highlighted the forthcoming streamlined London Plan, expected to be significantly shorter and designed to reduce duplication while encouraging greater flexibility in how policy is applied.
That move towards flexibility was echoed in several planning sessions across the week, particularly discussions around whether a more rules-based planning system under the draft NPPF would help accelerate delivery or risk reducing the flexibility needed to respond to real-world viability and site-specific challenges.
There was also significant focus on the need to simplify and standardise aspects of the planning process. Discussions highlighted proposals for more standardised Section 106 agreements for small and medium-sized schemes, alongside calls for clearer national policy mapping and greater consistency within local plan policies – while still allowing for local variation where genuinely necessary.
Affordable housing delivery remained high on the agenda throughout UKREiiF. There was broad recognition that funding remains heavily oversubscribed, with strong competition expected for future allocations. At the same time, small sites are expected to play a much more significant role in housing delivery under the emerging London Plan framework – a move likely to generate both opportunity and local debate.
The conversation around confidence also extended into government and delivery agencies more broadly. Several speakers acknowledged the importance of restoring confidence across the sector, particularly amongst SME housebuilders, with Homes England discussions focusing heavily on the proposed Housing Bank and the need to accelerate housing delivery through quicker adoption of policy reforms.
Taken together, many of the discussions at UKREiiF pointed towards an industry trying to adapt to a new operating environment. The market is not standing still, but successful delivery increasingly depends on realistic assumptions, stronger partnerships and a willingness to evolve traditional approaches.
Alongside the formal sessions, UKREiiF remains one of the most valuable opportunities in the calendar to reconnect with clients, partners and industry peers. Newsteer’s annual Flight Club event once again proved hugely popular, bringing together clients and colleagues for an evening of competitive darts, networking and conversations that continued well beyond the exhibition halls.
If there was one clear takeaway from this year’s event, it was that the industry still has ambition – but delivery, flexibility and confidence are now at the centre of the conversation.