The real estate and construction sector is showing cautious but growing optimism for Mergers and Acquisition (M&A) and inward investment activity in 2025.
Some 65% of senior leaders expect an increase in inbound M&A over the next 12 months, a report from UK & Ireland law firm Browne Jacobson shows.
Investor appetite remains steady in high-growth areas such as logistics infrastructure, warehousing, data centre development and urban regeneration.
While the industry still faces significant pressures – including the highest number of insolvencies across all sectors in the 12 months to January 2025 – companies are increasingly seeing strategic M&A as a way to preserve market share, stabilise operations, and strengthen financial resilience.
Michael Sadler, partner and head of real estate and construction at Browne Jacobson, said: “Despite pressures, we’re seeing a measured sense of optimism in the market, particularly in relation to inward investment and inbound M&A activity.
“Investors are taking a strategic view, with heightened interest in logistics hubs, data centre infrastructure, and mixed-use regeneration schemes.
“This aligns with long-term structural shifts: the drive toward urban renewal, the need for regional development, and the sector’s accelerating transition toward modern methods of construction.
“We have seen a ‘rush’ to jump on the data centre bandwagon but entrants to this market require significant up-front capital investment and the data centre sector generally faces a skills gap.”
Some 60% of senior leaders expect AI and digital to increasingly impact M&A activity, reflecting the rise of automation and smart construction.
Government support is expected to shape the M&A landscape, though views on its impact are divided. Nearly half (49%) said the new UK government has increased investor confidence, citing announcements on housing investment and construction skills training.