From technical perspective, it won't be a next gen game. Actually it is still using ps4 game engine anyway. But the overall looks and presentation feels next gen for any casual gamers.
I would be surprised if there actually is a "PS5 engine" from Guerrilla. Like, Decima 2.0? I don't think it'll get that kind of total rewrite, and I'm not sure it needs it in order for the studio to push the hardware it works on.
They have a scalable, complex engine, with deep subsystems for everything from physics to vegetation to weather representation. Probably they will explore something like the virtualized micropolygon data systems of Nanite as other developers are in the wake of UE5 (they already have something of a GI solution but I'm not sure how Lumen compares to other approaches,) but that could be added in rather than requiring a total rewrite. Decima is the PS4 engine, it'll be the PS5 engine, it could be the PS6 engine.
Maybe it's still early and COVID-delayed still, but we're not hearing much about new engines being written for these new platforms. It's more about adapting and improving the scalable technology they have. Even UE5 is apparently more of a signpost release of Unreal features rather than a totally new engine, Nanite and Lumen are major new modules but everything else is just rolling along from the 4.x to 5 as components on their own upgrade schedule, so much so that project files barely need a rework before a UE4 project opens up just fine in UE5's Editor (which was NOT the case for UE3-to-UE4.)
So maybe something will come along and say, "Everything that came before, throw it away, we're doing it this way now," and we'll have this end of what people are looking at like "PS5 = PS4Pro+Super" as the way games get made. Maybe, but I'd be surprised to see that happen. More likely, we'll see great strides with what exists. Guerrilla will use the same Decima engine, but eventually they'll be throwing so much at it and have so many advanced systems running that a PS4 version will be inconceivable, and that'll be the flow of next-gen. Game engines lived out on the prairies in the pioneer days of old times, but they settled and set up town in the PS3/360 era, now they're real suburban in terms of their way being modern and refined and the way of the world.