TURNER & Townsend is urging construction clients, developers and project teams to prepare for renewed volatility and avoid making ‘premature’ decisions in response to conflict in the Middle East.
In its Spring 2026 UK Market Intelligence report (UKMI), the company has held its forecast for tender price inflation (TPI) at 3.5% for real estate and 5% for infrastructure. These projections factor in a range of market pressures, including labour and materials price inflation to the changing taxation through the Carbon Border Adjustments Mechanism (CBAM).
The report highlights the conflict and wider repercussions on economies, trade and logistics as a source of understandable concern for construction costs, timescales and overall viability. However, it is warning against reacting too quickly, calling instead for ‘measured, evidence-led decisions’ based on live pricing data, intelligence around market capacity, and robust scenario planning.
The report says that while the start of 2026 brought a more stable economic outlook, economists are now anticipating higher CPI inflation, and a reversal of interest rate cuts that had previously been priced in by borrowers.
Stephanie Marshall, MD, UK real estate cost management, said, “While we started 2026 with steadier sentiment in the market, confidence is being disrupted again. Projects are operating in an increasingly complex landscape and reacting too quickly to uncertainty brings its own risks. The impacts of the Middle East conflict on construction will depend heavily on how the situation unfolds in the coming weeks and months.”
Turner & Townsend is calling for clients and project teams to balance ‘disciplined risk assessment with flexibility’.
Stephanie Marshall added, “Our advice to clients is not to speculate or rely on assumptions, but to base decisions on the facts of what we’re seeing in the market. That means having a clear view of live benchmarking data and tendering trends. It’s also means working more closely with supply chains – understanding suppliers’ positions and building a realistic view on costs and how risk can be allocated most effectively.
“All of this becomes even more important when we consider the ongoing capacity constraints across construction. Although the latest S&P Global UK Construction PMI figures may show new projects continuing to fall, there are significant existing programmes coming down the track – from the New Hospitals Programme to NISTA’s £718 billion infrastructure pipeline – and contractors’ increasing risk aversion will keep capacity concerns front of mind.
“There are headwinds, new and persisting, which are impacting construction’s ability to invest and deliver. For project teams, the priority must be to focus on what’s within their control or influence – making informed, confident decisions, not rushed ones.”
