Kier Group, a century-old construction firm and one of the United Kingdom’s largest builders, announced it will cease housebuilding activities from 2027 to concentrate on infrastructure projects such as roads and hospitals. The FTSE 250 company cited ongoing challenges in the property market as a key factor behind the strategic shift, with plans to reallocate capital towards strengthening its balance sheet.
Currently, Kier’s property development portfolio includes over 5,000 homes, with construction underway at seven sites. The company has committed to completing these projects before exiting the residential development sector. Chief Executive Stuart Togwell described the move as part of a broader effort to simplify operations and focus on areas offering greater growth potential, including water, energy, defence, and healthcare infrastructure contracts.
Kier is involved in several major UK projects, including the High Speed 2 (HS2) railway and the Sizewell C nuclear power station. Its existing property developments also include a £55 million office building in Liverpool and a 9,290 square meter warehouse in Manchester.
The decision by Kier comes amid a wider downturn in the UK housing market, which has seen persistently high inflation, escalating construction costs, and subdued demand from homebuyers. These factors have put substantial pressure on construction firms and housebuilders.
This development presents a challenge to the UK Government’s housing plans. The Labour Party’s manifesto includes a pledge to build 1.5 million new homes during this parliamentary term—a target Housing Secretary Angela Rayner recently acknowledged as increasingly unlikely to be met.
The housing market slump is also impacting other builders, with MJ Gleeson, a regional housebuilder, reporting a £2.7 million loss for the year ending June 30, a reversal from a £20.5 million profit the previous year. Chief Executive Graham Prothero attributed the downturn to a record-high number of homes for sale in England, higher mortgage rates, and broader cost of living pressures dampening demand.
Prothero also raised concerns about regulatory burdens affecting the industry’s profitability, including a new building safety levy aimed at funding cladding remediation and upcoming net zero emissions regulations. He called on the Government to consider delaying these measures to alleviate the sector’s financial challenges, emphasizing the difficulty of imposing additional costs amid the current market conditions.
Together, these developments highlight the significant headwinds facing the UK construction and housing sectors as companies adjust their strategies to navigate a challenging economic environment.