2025: A Transformative Year for the Property Industry – Trends, Challenges, and Opportunities Ahead

Introduction

2025 is already on track to be a year of change, with new planning regulations being put in place and the potential for development to be unlocked, alongside a range of economic and policy changes which are yet to be proven.

With specialists across a range of property sectors and markets, from traditional assets to alternatives, a number of Rapleys’ experts provide here some quick predictions for the year ahead, considering upcoming trends and potential challenges and the impact they will have on the property industry.

Business Operations

Kate Scholes, Head of Business Operations, Manchester

2025 will see a greater focus on people and operational costs thanks to the budget changes to NIC, living wage rises and other rising costs. Some property firms may be looking at how to use AI and data to fulfil staff roles more efficiently. Others may look to move staff into different teams temporarily alongside job cuts. However, we believe that those who place value on the retention and attraction of talent, ongoing recruitment of best in-class experts, plus the productivity, wellbeing and attraction of workplaces and investment in data and technology will win because ultimately, it’s how these things work together that determine success. People will never be replaced, but they can be better supported by their surroundings and tools. That’s what Rapleys will be focusing on – alongside ongoing growth in the right places for our clients – so that we can adapt quickly to this fast-paced changing market and show our belief that there’s an ongoing and growing need for unique property insight no matter where we are in the cycle.

Katy Blake, Head of BD & Marketing, London

PropTech and data will continue to rise in importance. AI has a part to play but the personal insight and expertise of our people will be even more crucial going forwards as it’s one of the only true differentiators if the playing field is levelled elsewhere. In terms of doing business development, we are likely to see more of a shift towards CPD sessions and ‘lessons learned’ and joined up social impact activities like community volunteering in addition to the usual conferences, events, sporting and charitable initiatives.

Building Consultancy

Jason Mound, Partner and Head of Land Development Project Management, Birmingham

Predictions for UK transport, utility and infrastructure development in 2025 highlight significant advancements aimed at supporting strategic housing delivery as well as broader economic growth.

Transport: Plans include creating long term national transport strategy focused on greener and more efficient systems, integrating public transport with active travel measures while aiming to double the mode share of rail by 2035. These strategies align with housing needs by promoting connected and sustainable communities.

Proposed initiatives include:

• Prioritising the electrification of railways and the transition to low-emission buses. Improved infrastructure for EV’s.
• Focused upgrades in urban mobility to include bus rapid transit systems and metro style expansions to improve connectivity for suburban housing to the cities they neighbour.
• Integration of mobility hubs to combine public transport, cycling, car sharing and other active travel measures.

Utilities & Energy: Key projects in energy security including offshore wind farms and upgrades to energy grids to support housing delivery by ensuring reliable utility infrastructure. Upgraded energy grids and potable water networks in particular, are key to ensuring the viability of housing delivery. Decentralised energy systems such as community solar and microgrid technologies are also encouraged for local generation and storage solutions all aimed at the transition towards net zero alignment. The Nationally Significant Infrastructure Projects (NSIP) government action plan aims to introduce a fast-track process for critical utility projects. Private investment is also being encouraged through infrastructure playbooks to fund large scale utility projects while ensuring alignment with national housing and industrial strategies.

Infrastructure: Wider infrastructure including waste and wastewater infrastructure are critical measures with plans in place to include reforms to accelerate the implementation of these projects. Flood resilience and flood defence projects are also a key component. Housing is in itself, critical infrastructure for economic growth. The proposed reforms to the NPPF aim to streamline housing delivery by addressing bottlenecks in planning and aligning policies with broader infrastructure goals including:

• Proposed fast-tracking of large-scale projects, particularly those classified under the NSIP process to reduce delays in securing permissions for enabling infrastructure that underpin housing growth.
• Improved policy alignment to provide a greater emphasis on integrating housing delivery with regional transport and utility strategies to aid support local authorities in local plan making. This supports the 15-minute city concept where new developments are within a short commute of essential services.
• Reinforcing the need for local development plans to address the social infrastructure needs of communities including education, healthcare, green space etc and to ensure phased delivery in support of these goals.
• Prioritising brownfield redevelopment and community-led housing initiatives, streamlining approvals for affordable and sustainable projects.

James Porter, Partner and Head of Building Surveying, London,

In the industrial market, we expect ongoing demand, fuelled by the ever-growing dominance of e-commerce driving well-located warehouse space. We will see a shift towards more sustainable warehousing particularly at the higher end of the market, whilst the industrial estate will continue to evolve as occupiers demand more amenities in spaces that enhance wellbeing – including green spaces, on-site gyms and other staff facilities not usually associated with sheds. Whilst the outlook is positive, challenges remain – mostly availability of land particularly in London and other urban areas.

Demand for logistics space throughout the Cambridge region is expected to stay strong, driven by e-commerce and tech-related industries. Investors remain attracted to this sector due to favourable rental prospects and limited supply.

With regard to offices, we expect a real focus on wellbeing and flex to continue alongside greater investment in biophilic design and natural elements – think lots of plants and water.In social housing, surveys are starting to be done in earnest for RAAC.

In education, we await the impact of VAT and business rate decisions on private schooling and how this will play out when it comes to further capex and pressure on state and grammar institutions.

Darren Holdstock, Partner and Head of Building Surveying, Cambridge

Whilst much of the UK office market faces challenges, Cambridge’s high demand for prime, sustainable office space suggests stable or growing rental yields. Cooling inflation and slightly reduced borrowing costs in 2025 are likely to stabilise investor confidence, though institutional caution remains.

There are a vast number of new high-rise developments within Birmingham at present, with the largest being the mixed-use site on Great Charles Street (formerly known as ‘The Bomb site’ carpark). We see more mixed-use developments, of varying sizes, being constructed to absorb the predicted growth and expansion brought about by the imminent arrival of HS2.

Life sciences and tech will continue to grow across the country. Cambridge’s robust innovation ecosystem, driven by strong venture capital inflows, particularly in biotech and quantum computing, is expected to fuel demand for high-specification office and lab spaces. Significant developments at sites like Cambridge Science Park support this trajectory, aiming to double their floor space by 2050, enhancing job growth and infrastructure capacity.

Richard Crow, Partner and Head of Building Surveying, Birmingham

For the West Midlands, we predict a major push in affordable housing with brownfield and greenfield development to help address the current shortfall with supply. The delayed planning decision to release greenfield land along the southern parts of the Shopshire County, indicates that Government is looking to identify locations they can release, to quantify the number of plots/properties to meet demand. The search is already on to find private sector investors to support the public sector development of healthcare, digital innovation, biotech and fintech. Supertech is a great example of this innovation.

Martin Gladwin, Partner and Head of Housing Consultancy, Manchester

In 2025 I see more consultation on and potential introduction of Energy Performance Standards – to bring all social (and private) rented stock to minimum EPC Band C by 2030. There is also the introduction of Sustainability Reporting requirements for social housing landlords.

The continuation of Awaab’s Law will further enforce social landlords to address damp and mould issues (and other hazards within dwellings) within strict time deadlines.

I hope to see increasing demands on new developments to meet sustainability and energy efficiency standards – higher costs alongside higher targets will put huge pressure on social landlords’ development programmes

Commercial

Tim Richards, National Head of Agency, London

The national retail chains will continue to be under pressure – expect more closures in weaker towns and relocations to cheaper positions (often out of shopping centres, where they are saddled with service charges, into High Street standalone stores). Established F&B chains to continue to be challenged by the new entrants who will mostly be covid-debt free. We expect higher end F&B to be especially pressured by a decrease in disposable income.

By 2030 there will be a Greggs on every street in Britain.

Julian Leech, Partner and Head of Central London Office Agency, London

The lack of available new Central London office schemes in 2025 will lead to increasing competition for pre-let opportunities 2-3 year in advance. Oxford Street will continue its re-invention to a more mixed-use environment, and we expect vacancy rates to drop below the market norm of 9%.

Daniel Cook, Partner and Head of Commercial, Cambridge

2025 will see more M&A activity within the Automotive & Roadside industry, with only one privately owned dealer group left in the top five. We also expect to see more consolidation of dealerships. This will affect mainly volume brands such as Ford and Stellantis (Vauxhall, Peugeot, Citroen, Fiat etc) but premium brands with VWG and Mercedes-Benz are expected to also be impacted.

This will lead to more properties coming to the market, especially smaller sites not capable of housing more than two brands. We would also expect to see a reduced number of planning applications for new developments.

In fuel markets, the availability of operational sites will continue to be low with the demand remaining high.

We will continue to see planning applications on new to industry sites, but an increasing quantity will include EV provision. We will start to see a “plateau” of rents in the drive thru sector – they will continue to rise but at a lower level. Fuel prices will come down slightly (depending on macroeconomic events) in relative terms as operators try and appease government pressure on high fuel prices owing to a lack of competition.

The demand will remain high for roadside development opportunities.

Rebecca Harper, Head of Investment, London

The market seemed to be bouncing back in Q3 with more activity and better sentiment, however, post budget this has dwindled somewhat in 2024. I do, however, think the market will improve this year and hopefully be more predictable for the foreseeable future albeit of course this is inextricably linked to world events which as we know have caused shock after shock over the last five years. Perhaps investors have learned to price in the unpredictable?

Obviously, we will be watching inflation thanks to increased Government borrowing, and thus interest rates which we now expect to remain at a higher level for longer.

Commercial rents will move on, particularly in the more alternative sectors where there is appetite to spread risk, and niche sector tenants, such as dentists and vets are expanding which provides opportunities for landlords and the high street.

In automotive, we still expect lots of M&A consolidation with car dealerships buying in their leaseholds as a result.

As advisors, we need to work harder to showcase the deal opportunities to investors who are currently holding cash and perceive they are earning more from money being in the bank. In this case asset management led activity is key and perhaps some distressed assets will tempt overseas buyers to spend in the UK.

Planning

Jason Lowes, Partner in Planning, London

In 2025 all eyes will be on the NPPF, what it entails and how practical the changes will be. We are really hopeful that this has been looked at as part of a ‘bigger picture’ strategy instead of several incremental changes around the periphery which risk not making the long-term structural changes the industry really needs!

We’d also really like to see some more focus on use classes and delivering employment land, and the more alternative types of real estate. The Government must recognise that meeting the nation’s need for growth across a range of uses and types of development, including renewables, data centres and alternative forms of residential uses is key to supporting the delivery of the housing.

Richard Pestell, Partner in Planning, London

The government’s commitment to economic growth is admirable. However, it has to be recognised that there is a shortage of skilled planners nationwide, and local authorities have struggled to keep up with the continuing evolution of the planning system.  In the longer term the move to strategic planning is welcomed, as is the recognition that these strategic plans need to be slim and efficient to produce.  In many areas administrative districts have long failed to reflect any reasonable economic geography and this has left critical strategic housing and economic issues unaddressed in many areas.

In the short term the growth envisaged will require significant resource in local authorities, but the announcement of funding for additional planners is a drop in the ocean (less than one additional officer per local authority).  In addition to more planners on the ground, strategic planning skills have been stripped from the sector in many areas and need to be re-built.  The risk for the government is that – whatever reforms they seek to implement – local authorities will struggle to play their part in implementing them, holding everything up. Therefore, key to the government’s drive for growth is proper support for local authorities.

Kieran Rushe, Partner in Planning, London

We now have a government which recognises the importance of growth in the digital economy, and the planning system’s role in enabling this. This is to be welcomed with open arms, but there is a negative perception of data centres, in that they are seen to hoover up local electrical and water supplies, which is often deemed to have a knock-on impact on the potential to deliver more homes and other development at a local level.

Power and water infrastructure is stretched across the country. However, by their very nature, data centre operators (and those delivering the digital economy more generally) are not capable, themselves, of delivering the new infrastructure needed. Further, the requirements associated with liquid cooling and AI will only add to the stress on the existing infrastructure. In this context, the government has to recognise that improvements and increased capacity to the nation’s infrastructure is key to the growth of the digital economy, and not addressing this point risks torpedoing its worthy aims in this regard.

Residential

Angus Irvine, Partner and Head of Residential Living, London

2025 will see a stern realisation that delivering housing targets needs a lot more work and that it cannot be done without BTR/PRS and modular housing. The Government will need to incentivise these practices if they are to get moving amid the chaos of a changing NPPF, decreasing supply of labourers and skilled construction workers, and viability of schemes. Private side incentivisation is the only way to tempt capital into the sector quickly.  Landowners’ expectation of value may need to adjust if deals are to be done – perhaps Joint Venture Partnerships will tempt movement in this area.

Nick Fell, Partner and Head of Residential, London

The affordable housing sector will be watching the 2025 Spring budget with interest as to its five-year spending review and what the new grant funding programme will look like from 2026 onwards. Grant funding is still desperately and urgently needed for s106 units because there are consents for social housing up and down the country that will struggle to be delivered because there’s no funding for Registered Providers to acquire them right now. This will set the tone for commitment to deliver such units if they have a lined-up purchaser and operator ready thanks to funding. Otherwise, we may see even more sites delayed, further clogging the system as deliverability and viability are questioned and appealed. We also wait to see how local authorities oversee their spend following their control over all Right to Buy receipts, and what, if any incentives are provided to private investors in affordable housing alongside potential and much needed support for modular housing, which remains key to delivery targets but needs to be thought out.

Conclusion

At this early stage of the year, 2025 poses more questions than answers, and many of these answers won’t be known until the Spring Budget, on top of inflation and performance figures and, of course, interest rate decisions.

It’s crucial that the Government will provide concrete evidence of their support of the industry, alongside practical and well-thought-out delivery plans – particularly when it comes to planning, housing and business rates.

Following years of political turbulence, which has resulted in many stops and starts within development, stability also needs to be the name of the game. An ever-increasing requirement for investment into the country’s infrastructure and public buildings will require expertise from the private sector and right across the industry. Is 2025 the year in which the property market can support the drive for the UK to once again be one of the world’s most innovative and forward-thinking economies? Time will tell, but there is no doubt that shoots of opportunity will show and that the built environment will play a huge role in growth.