Green shoots: value of stalled UK construction plummets
The total value of construction projects stalled in the UK has fallen to its lowest level since the recession began in 2008
Around £12 billion of potential projects were put on hold last year, compared to £47 billion in 2012 and a peak of £80 billion in 2009 – according to Glenigan.
Tom Crane, economist at the industry monitor, said the figures were the latest indicator of rising confidence within the construction industry.
He said: ‘The value of stalled projects have been falling since 2009 and this latest figure shows the continuation of an encouraging trend, with a 16 per cent fall in the value of underlying projects (excluding projects with a construction value of £100 million or more).
‘This in part reflects the gradual recovery of confidence and activity from the shock that afflicted the industry and wider economy in 2008 and 2009.
He continued: ‘The falls also reflected that the overall development pipeline remained subdued during 2011 and 2012, with speculative projects no longer being put through the planning system.
‘Alongside strong improvements in projects receiving planning approval during the last 18 months, the value of stalled projects has continued to fall as these developments progress more quickly to start on site.’
The total value of potential work going on hold, including projects over £100 million, continued to increase during 2012. The lack of confidence to progress major schemes caused the overall value of projects that were shelved to rise by 39 per cent compared to 2011.
This trend was reversed in 2013, with the overall value of shelved projects down by 74 per cent as the outlook for the wider UK economy has improved.
Renewed confidence has also seen developers bring shelved projects back into active development.
One high profile example of this is Westfield’s £260 million Broadway shopping centre in Bradford.
The scheme was put on hold in 2008, however improvements in consumer spending have revived interest in shopping centre development and construction has now restarted, with half of the retail space already pre-let.
Another project coming off hold shows the change in sentiment between the dreary first quarter of 2013 and the much improved outlook during the second half of the year.
The £2 billion Chelsea Barracks luxury flats scheme was placed under review in January last year but Glenigan has recently been advised that preparations have resumed, though construction activity remains a way off.
Crane said: ‘With output during the three months to November 2013 5.3 per cent higher than a year ago, and the January Glenigan Index showing a 15 per cent increase in project starts during the final quarter of last year, it’s clear that the construction industry is on a rising tide.’
‘With fewer projects being mothballed by developers and a 10 per cent rise in new approvals during 2013, the industry seems set to go full steam ahead during 2014.’