By contrast, the volume of construction work in Scotland is slightly down compared to the rest of the UK but RLB predicts greater stability in the economy over the next 12 months, improving project delivery and benefiting supply chains and developers alike.

The report states that Edinburgh has huge potential to grow in terms of size and population, and could, in the future, come close to overtaking Glasgow as Scotland’s biggest city. It is working to improve the supply of Cat A office space and focusing on regeneration of areas such as Granton, Scotland’s largest brownfield sites set on a coastal green space.

Sustainability and the drive towards net zero will remain a major focus for the industry, both in the construction of buildings as well as their maintenance and operation. Passivhaus designs continue to be explored.

There is optimism the new UK government will be able to speed up the planning system which will improve the pipeline for construction projects.

In both the short and long-term outlook, the shortage of workers and specialist skills in the Scottish construction industry will continue to impact labour costs and, in turn, tender price levels.

The impacts of movements in commodity prices on tender price levels have been generally in line with trends experienced in the rest of the UK. The cost of construction materials remains high due to inflation, but market conditions are looking more settled compared to previous periods of price volatility.

Commercial

The lack of flexible and sustainable office space has caused an increase in lease renewals in both Edinburgh and Glasgow. The lease extensions, however, are mostly under two years in length. Further Cat A office space in Edinburgh has become available through the Haymarket development, which is nearing completion and already now partly occupied.

Data Centres

Scotland’s climate and excellent renewable energy capability make it a good location for green data centres, and 15 possible sites have been identified across the country.

Education

New schools and community campuses continue to be developed in Scotland, with many meeting the international Passivhaus standard for energy efficiency.

Healthcare

Budget pressures have meant plans to build new hospitals, surgeries and a network of treatment centres in Scotland have been delayed or paused for up to two years. Ongoing maintenance of current building stock and estates will continue.

Infrastructure

Three infrastructure projects make up the current top 10 largest construction projects in Scotland: the Cerulean Winds and Inch Cape offshore wind projects, and EGL2, 2GW HVDC cable link to be built between Peterhead, Aberdeenshire, and Drax power station in North Yorkshire.

Logistics & Manufacturing

The proposed Lothian Gateway development, a 98-acre logistics park fronting the M8 motorway in Bathgate, will help ease the shortage of consented land for logistics.

Sport

New stadium developments in Scotland include Dundee FC’s proposed £95m stadium and event campus, currently awaiting planning permission in principle, and a new home for Aberdeen FC.

RLB Scottish partner Martin McConnell said: “The outlook for the Scottish construction industry is cautious but optimistic, which reflects the market opportunities available and the broader economic picture.

“On the positive side, there is ongoing demand for commercial and mixed-use developments in Edinburgh, Glasgow and Scotland’s other major cities. Infrastructure projects remain a key driver of activity, particularly in areas like transportation and renewable energy.

“Labour shortages, however, are putting pressure on project timelines and costs. Lower interest rates and cheaper borrowing will boost the confidence of developers, unlocking investment that will help to stimulate long-term growth.”