Experts and international practice leaders come together for RIBA’s twice yearly Economics Panel webinar to provide forecasts for 2025 and 2026 and reflect on the current business climate for architects
Ever since the world’s most powerful politician began a game of economic ping-pong using a handheld chartboard – Antarctic penguins somehow included – one thing became certain: that a new era of policy unpredictability is ushering in uncertainty, adversely impacting on current global growth.
As the chair of the panel, Helen Castle, director of publishing and learning content at RIBA, stated at the start of the webinar: in April, the World Economic Outlook of the International Monetary Fund delivered the ‘grim message’ that Trumpian trade policies have now pushed economic uncertainty to levels higher than those seen at the peak of the Covid-19 pandemic.
And in our own industry, with instability driven by geopolitics, trade tariffs, conflict and economic inequality (‘the richest 1 per cent have captured two thirds of all new wealth since the pandemic’) architects are ‘once again being called to adapt with resilience’, she said.
But don’t worry – the news isn’t all bad
Noble Francis, director of economics at the Construction Products Association, provided a cautious yet hopeful forecast. Total UK construction output is in fact projected to grow by 1.9 per cent in 2025 and is forecasted as 3.7 per cent in 2026, according to CPA research.
Private housing offers hope
Private housing is leading us out of the mire, with 4 per cent growth in 2025 and 7 per cent projected for 2026. That's important, because housing makes up around a third of practice revenue (34 per cent) overall, and a majority of revenue for smaller practices, explained Adrian Malleson, head of economic research at RIBA, drawing on the findings of RIBA’s Benchmarking and Future Trends surveys.
While private housebuilding is slowly recovering from a 20–30 per cent drop in completions in 2023, interest rate reductions and increased demand – particularly in the build-to-rent sector – are helping its revival.
Unfortunately, delays from the Building Safety Regulator (BSR), especially for high-rise residential, remain a major risk. The BSR's own statistics put delays at around 14 weeks. However, ‘that’s not what most of the high-rise residential developers are saying’, reports Francis. Word on the ground is that delays look more like six to nine months. Mid-rise projects offer some relief, though similar pressures affect them too, if to a lesser extent.
Private housing repair, maintenance, and improvement (RMI) work – another sector many small practices are embedded in – is also set to grow by 2 per cent this year. ‘RMI covers a wide variation of work, everything from fixing a boiler, to a loft conversion, to a conservatory and everything in between,’ explained Francis. ‘Small value work, but aggregated across a housing stock of 29 million across the UK, it all adds up, and that's why it's the second largest sector.’
Lockdowns drove a temporary spike in activity (from cooped-up homeowners), followed by a dip due to the cost of living crisis and rising energy and commodity price hikes. Now the cycle is tentatively back on the up; wage growth (inflation at 6 per cent) and homeowners’ savings are as positive drivers, but enthusiasm is often tempered by risk-aversion to loans. ‘There are two exceptions to this,’ Francis continued: ‘energy efficiency and fire safety work.’
Other sectors reason for cautious enthusiasm
Public sector construction – schools, hospitals, and prisons – (‘grim and has been for years’ deadpanned Malleson) is finally being resuscitated due to government investment, although delivery issues persist. This represents 20 per cent of architects’ work, according to RIBA data. In the commercial sector (representing 30 per cent of work), while new towers and retail developments lag, high-end fit-outs and refurbishments are picking up the slack.
Further risks generally include wage inflation as mentioned, material cost hikes, and subcontractor insolvencies, ‘a delayed outcome of the downturn’, said Francis. Still, on balance, positivity is permitted in 2025, with broad sector recovery tentatively expected – assuming policy and tariff volatility stabilise.
Architects’ revenue
When it comes to architects reporting on the health of their businesses, strong revenue growth is being dampened by squeezed profits. ‘Revenue of RIBA Chartered Practices broke the £4 billion mark for the first time,’ Malleson said, although profit margins remain flat due to escalating staff costs, rising NIC contributions, PI insurance, and software expenses.
Panel member and architect Jo Bacon of Allies and Morrison admitted that recruitment and staff retention are a challenge for her business: ‘Salaries in our industry are not rising adequately in line with demand, [nor] with cost of living in our cities, whether it's London, Cambridge or Manchester, and that's a big regret,’ she said.
Back to RIBA’s data – service-wise, all-stage architectural services still dominate (45 per cent of work), but consultancy and early-stage design now account for over 40 per cent combined. This has also played out in Bacon’s experience. Clients approach her practice ‘to secure permission for complex and/or sensitive sites’, she observed, often with lower fees – and then hand off to design-and-build contractors.
‘That's competitive, but it's also very frustrating,’ she said. ‘Quality is what really matters for design, for safety, for sustainability, for public support and for the reputation of the profession,’ and that is at risk of being compromised.
Repeat business
Importantly, Malleson observed, ‘64 per cent of work comes from repeat business or word of mouth,’ which demonstrates the need to nurture client relationships very strongly. Bacon agreed: “We have quite a lot of empathy for [our clients’ difficulties over cost certainty] and our role has been to support them… as a consequence, we are now seeing some of those outcomes from this hard work coming through.’
International experience
RIBA data also reveals a ‘striking trend’ toward internationalisation of UK practices, with almost 25 per cent of total revenue now coming from overseas. For Allies and Morrison, growth areas are particularly strong in the Middle East, Canada, and China.
Meanwhile, panellist Ananya Singhal of Studio Saar highlighted the contrast between his practice’s operations in Rajasthan, India, and its small UK studio in Somerset. While the UK faces slow approvals, high costs, and limited skilled labour, India offers rapid planning, client optimism, and shorter build times. ‘India is booming while the UK isn’t,’ he stated frankly. ‘In India we are looking at an incredibly fast rate of growth, especially in cities, and that gives us an opportunity.’
Moreover, Singhal noted that, in his arena at least, sustainability targets and the drive to meet net zero are felt with more ‘zest’ in India. ‘Here [in the UK] clients are doing it to meet regulatory needs, whereas in India it feels patriotic,’ he said.
A different practice model?
He also advocated for a radical rethink of UK practice models. Studio Saar is, unusually, a subsidiary of a much larger electronics and manufacturing business. ‘That means we have a very different outlook when it comes to the economics of how our practice works,’ said Singhal. Its unique nature (and the diversity of projects Studio Saar takes on) leads Singhal to believe that the UK would benefit from a ‘revolutionary change’ in terms of how practices are run as businesses.
Agility, and looking beyond
Speaking from Hong Kong, panellist and architect Wai Tang, co-founder of QUAD Studio, described how his studio pivoted creatively in the wake of China’s burst housing bubble in 2020. ‘This was incredibly painful to architects in Hong Kong, because a lot of architects there are actually working in mainland China. With that kind of a downturn in the market, we had to search for other ways of making a living… we had to go back to our roots.’
Initially this involved infrastructure projects (which took a dip in HK generally, although the sector is now moving again) and also university projects. ‘They're looking for design and build led by architects, which is very different from a lot of things I've experienced’, continued Tang.
Equally interesting has been Tang’s practice’s outward-looking mindset. This willingness to look further afield has led to major commissions in Morocco after a competition entry gained local government attention. This in turn opened new markets across Africa – a major growth area. It was by maintaining a good relationship with a former colleague – RIBA chartered architect, Meryem Benyhaya, of BENY Architects, based in Casablanca – that the opportunity arose, causing the practice to ‘look further afield than we ever expected’.
Managing uncertainty
The panellists offered further advice for managing uncertainty: remain open to collaboration (Tang); invest in people during downturns (Singhal); and prioritise client and staff relationships (Bacon). Flexibility, global thinking, and mutual support emerged as key takeaways from this candid discussion rooted in experience.
To sum up: despite economic shocks, medium and large firms with diversified portfolios have reason for optimism in the near term – especially those with opportunities overseas. Smaller, housing-focused practices remain vulnerable to fragile consumer sentiment and planning delays, but even so, with interest rates inching downwards and the cost of living crisis easing, there is reason to be hopeful here too. Taking steps now to futureproof business is wise – because every forecast made by the panel is dependent on there being no further bizarre tariff announcements from across the Atlantic. In other words, watch this space.
Tips
- Open your mind and learn from elsewhere: ‘There is a lot that the UK can learn from India,’ said Ananya Singhal. ‘We have had to be diverse and go further than we were ever expecting,’ added Wai Tang. ‘Be flexible to follow the work and the clients with interesting projects,’ reiterated Jo Bacon.
- But also, pay attention to what’s under your nose: ‘Your future work is often very close to home,’ observed Malleson. 64 per cent of work comes from repeat business or word of mouth.
- Nurture your talent: ‘Maintain your staff – it pays off in the long term,’ said Singhal. ‘Look after the talented people who work for you.’ Bacon agreed: ‘They're the problem solvers with enormous amounts of dedication.’
- Understand your supply chain to mitigate risk: ‘This isn’t 2015. We can't just source from the cheapest place,’ said Noble Francis. ‘Security of supply is understanding where your products are coming from, not just getting them from builders merchants or from the subcontractors… understanding your supply chain is going to be just as critical as the cost of supply.’
- ‘Collaborate collaborate, collaborate…make friends and influence people,’ said Bacon. Make use of RIBA groups locally and internationally, ‘because looking after each other is also worthwhile’, she said.
RIBA Economics Panel is sponsored by Milient, the all-in-one project management software system for architects.