While revenue growth hasn't kept up with the rising costs of running a practice, a surge in overseas work could help turn things around for UK practices, says RIBA head of economic research and analysis Adrian Malleson
During 2024, rapidly rising practice revenue from overseas bolstered the UK’s status as a leading service economy and improved our global trade balance.
It’s been a turbulent few years, during which we've seen political turmoil, weak economic growth, a minor recession, spiking inflation, raised interest rates, interminable planning delays, intense fee competition, client hesitancy and an underinvested public estate.
With that as the business background, architecture practices have too often struggled to secure fees that reflect the professional value they bring.
Nevertheless, the findings of the RIBA Benchmarking show revenue grew strongly in 2024 – to £4 billion. That practices were able to increase revenue in such difficult times shows a core of resilience and adaptability running through the profession.
But revenue growth hasn’t been enough to keep pace with rising practice costs. Payroll, insurance, premises and IT costs have all been on the increase. Revenue may have risen by 13 per cent but profits have fallen by 2 per cent.
However, amid the often-difficult domestic landscape, one area of growth stands out: exports. The profession is thriving in international markets and 2024 saw a surge in UK architecture overseas – a surge that fits with the UK’s strength in the service and creative industries.
UK as a creative/service powerhouse
The UK is a powerhouse of international trading in the service and creative industries. And UK architecture is among the growth leaders.
Of the UK's total economic output, 81 per cent comes from our service industries, far outpacing traditional sectors such as manufacturing and agriculture. The service sector includes global-leading businesses from banking, insurance and consultancy. These businesses are spearheading international trade and the UK is now the world’s second-largest service exporter, with only the US ahead.
But not all those providing overseas services are bankers. There is another, sometimes overlooked, but powerful service sector: the creative industries. Embracing sectors including advertising, fashion, film, music, publishing and video games, these industries employ 2.4 million people and make up almost 6 per cent of the UK economy (compare that with 0.6 per cent from farming, for example).
While integral to the UK construction industry, architecture is also a global creative industry. It has an enviable international trade balance and exports are rapidly growing. Latest estimates of UK global trade in services from the Office for National Statistics value exports in architectural services at over £1.5 billion, with imports at just £150 million. And that export number has seen giddying levels of growth – a 220 per cent rise since 2016.
The most significant export markets for UK architecture are the USA, Canada, China and the Gulf states. Each buys over £100 million of UK architectural services annually. Saudi Arabia is a rapidly growing market with UK exports now totalling over £300 million. Another surprisingly significant market is Poland. As one of the fastest growing economies in the EU, with relatively low debt and an economy growing by more than 3 per cent per year, its UK exports exceeded £100 million in 2023.
What’s more, the value of UK architecture to the UK economy is greater than can be counted in the trade balance. Like many creative industries, architecture is an expression of the UK’s talent for innovation, design and originality. The creative industries give the UK a global status greater than its economic heft alone and help to attract foreign investment, talent and visitors.
Overseas revenue drives growth
Based on the detailed submissions from RIBA chartered practices (thank you), the annual RIBA Business Benchmarking survey provides a high-resolution snapshot of the business of architecture. RIBA chartered practices are leading the architecture export growth. The latest RIBA data shows overseas revenue grew to £934 million in 2024, an increase of almost 80 per cent within just two years. Nearly one in four pounds (23 per cent) of practice revenue now comes from overseas.
The big four export regions are North America, the Middle East, Asia and Europe. Despite Brexit, 2024 saw the EU grow in importance, accounting for 47 per cent of exports and bringing in £439 million of revenue.
Chartered practices are not restricted to these big four though, having a truly global reach and gaining work from every continent. The most important markets now may not be so significant in the future. Emerging markets show promise. Across the world, low and middle-income countries are urbanising at pace, bringing a burgeoning need for sustainable and resilient cities – many of which are yet to be built.
The early signs of future growth are already here. Africa’s urban centres are the most rapidly growing cities in the world, and Africa, although making up only 6 per cent of overseas revenue, has seen its fee values more than double.
However, international revenue is not evenly shared among chartered practices. London continues to be a global hub for architecture with its global population and diverse talent pool, its advantages of agglomeration, and its long history of design and creative excellence. This is reflected by the fact that 89 per cent of overseas revenue is generated by London-based practices. But being based outside London is no bar to international work. Take Ryder. While based in Newcastle and with a strong regional presence, it has a track record of successful international projects.
International work is also concentrated among larger practices. Those with 100 or more staff generate over 80 per cent (£760 million) of overseas revenue. But again, size is no bar to looking overseas for revenue growth. Take Hugh Broughton Architects. While not one of the very large practices, it has successfully developed an international presence as a specialist in polar buildings.
A look ahead
Even though the global geopolitical outlook looks increasingly precarious, international demand for UK architecture is set to remain strong. Urbanisation will drive global demand on a vast scale, and sustainable and resilient design will increasingly be needed. The UK’s current standing in creative, sustainable design is a firm foundation for future work, with London remaining a global hub for architecture and the creative industries.
At home, the adoption of new working practices and new technologies, such as AI, may increase productivity. Should we get the hoped-for stable economy, falling interest rates, planning system reform, investment in our public estate and uptick in new house-building then some overdue tailwinds will ease the profession’s challenges.
Looking ahead to 2025, chartered practices anticipate revenue growing by 8 per cent and costs rising by 6 per cent. If this turns out to be correct, profits will be rising, if only slightly, for the first time since 2019. Let’s hope so.