By Sarah Macklin 
There’s a bit of sunshine peeking through the clouds for property developers in the UK as we move into 2026, but it’s not all smooth sailing.
Fresh research from recruitment specialists Cobalt shows that while the development sector is beginning to feel more positive after a tough 2025, long-standing challenges around staffing, planning and overall market pressures are still slowing things down.
Confidence is slowly returning after a tough year
According to the Development Index 2026, which draws on interviews with leaders from housebuilders, developers, REITs and investment firms, there’s a sense that confidence is slowly stabilising. A few factors are helping to nudge sentiment back in the right direction:
- Finance terms are starting to soften again
- There’s hope that interest rates might fall further
- Industry folk are looking to upcoming clarity around the National Planning Policy Framework for a bit more certainty.
Those things combined are easing nerves after a year when development sentiment was, frankly, pretty subdued.
But (and it’s a big but ) these positives aren’t sweeping away the bigger issues facing the sector.
So what are the ongoing issues in the development sector?
Even with this cautious optimism, the report flags a bunch of pressures that are still very much biting:
- Planning delays are dragging projects out
- Project viability is squeezed thanks to cost hikes and tighter lending
- There simply aren’t enough schemes that appeal to lenders right now
- Developers are still struggling to find enough end buyers and occupiers.
That last one is a real reminder that it’s not just about getting schemes through planning, but also about making sure they make sense in the wider housing market.
Talent shortages are the real bottleneck
Perhaps the most consistent theme in the report is that skills shortages remain a major hurdle and could even undermine the more optimistic mood.
The industry is crying out for people who are not just technically solid, but who combine that with commercial nous, sustainability know-how and a good grasp of digital tools (including AI).
It’s not just builders and planners either. Employers are hunting for talent in:
- Land and development roles
- Technical and design functions
- Commercial and delivery teams.
There’s also a big shift underway towards refurbishment and regeneration work, which now makes up more than 80% of active projects. That’s great in theory, as it’s sustainable and fits with broader retrofit goals, but it needs specialists with specific skills in complex work that’s not taught on every construction course.
Maria Sinclair, Managing Director at Cobalt UK, summed it up well:
“The Development Index highlights a UK development market that remains ambitious but increasingly constrained in its ability to deliver. Economic pressures, planning complexity and ongoing skills shortages are emerging as significant risks to progress across the sector.
“Moving from ambition to delivery will require a renewed focus on execution, with investment in skills, stronger development teams and access to the right expertise becoming critical to navigating uncertainty and unlocking growth… The Index is designed to support that discussion, setting out the key pressure points and what the industry must address to move forward with confidence.”
So what’s the outlook?
If you’re in the business of building homes or shaping neighbourhoods, this report is both a welcome sign that sentiment is improving, and a reminder that stuff still needs sorting.
The optimism is fragile, and without real investment in people and skills, there’s a real risk that development activity could stay stuck in neutral, or worse, backslide.
