Construction confidence is ballooning as growth in both the housing and offices continued during the first quarter of 2014
According to industry analysts Glenigan, the total value of projects starting on site from January to March in 2014, was 15 per cent higher than a year ago. The rise has been fuelled by growth in residential, retail and office sectors.
The new figures show that private housing project starts were up 29 per cent while the number of office project beginning on site rose by 34 per cent. Retail is up by 28 per cent and hotel and leisure has increased by 15 per cent.
The figures have revealed an emerging divide between the private and public sectors with social housing, education, health and community project starts declining.
The value of health sector project starts fell by 14 per cent, while community schemes declined by 21 per cent, and a return to growth is said to be unlikely as government capital expenditure remains focused towards infrastructure investment.
Despite being the strongest growing market in 2013, the value of education starts fell during the first quarter of 2014. However the prospects for the sector remain positive, with government funding streams such as the Priority School Building Programme (PSBP) likely to have an increased impact into 2014.
Commenting on the figures, Allan Wilén, economics director at Glenigan, said: ‘Increasingly, we are seeing improved business sentiment translating into real investment across the economy. The positive project data within the commercial sectors in particular shows that firms and developers are more confident putting money into new construction.’
He added: ‘Private housing will continue to be a key driver of increasing construction activity, as evidenced by strong project starts in the first quarter of 2014.
‘The sector’s longer term fortunes were given a further boost in the government’s recent Budget, particularly with the extension of the Help to Buy equity scheme which will now run to 2020. The move provides additional certainty to house builders to bring forward sites for development and is projected to help a further 120,000 householders purchase a home.’
Previous story (AJ 04.03.14)
Construction growth up but housing starts down
Construction growth has continued throughout the start of the year despite the disruption caused by the flooding
According to industry analysts Glenigan, construction growth in February was up 10 per cent despite the economic disruption caused by the bad weather.
The growth was mainly spurred on by the rapid expansion in the office sector – projects starts were up by more than 50 per cent compared to last year – and by infrastructure, which saw starts up 64 per cent on last year.
The hotel and leisure sector also saw a return to growth, with starts up by more than 20 per cent.
But those projects reliant on public money saw declining figures. Starts of health projects fell by 43 per cent compared to a year ago, following a 10 per cent fall during 2013 as a whole. While education projects also slowed, despite growth during 2013.
Residential work also saw a decline, dropping two per cent overall, with private housing growth slowing to five per cent. The number of social housing projects starting also dropped by 15 per cent as flooding stopped projects from getting off the ground.
During the New Year the UK saw the wettest January in 250 years causing widespread flooding and disruption. This is said to have had a negative impact on the economy due to business closures and disruption across transport networks, causing delays to site openings.
However, the floods are expected to cause a rise in construction work later in the year when repair work is undertaken.
Commenting on the figures, Allan Wilén, economics director at Glenigan, said: ‘Private sector investment is the main driver behind the latest 10 per cent rise in construction project starts. Glenigan has recorded growth in the commercial and industrial property sectors that will feed through as higher industry workload during 2014 and 2015. Civil engineering also remains a hot spot, due to increases in infrastructure and utilities work.’
He added: ‘In contrast, the strong growth in housing project starts seen during 2013 lost momentum over the three months to February. The extreme weather conditions experienced over the winter months appears to have hampered the opening of some new sites and we anticipate a rebound in project starts during the spring as conditions improve.
‘Longer term recent events will generate additional repair work to flooded homes and business premises as well increased investment in flood defences.’