Figures released on Monday by Glenigan, the construction intelligence providers, forecast a 7.4% increase in project starts during 2014, as rising private sector investment and improved consumer confidence underpin further industry growth.
According to the 2014 Mid-Year Construction Review and Forecast put together by Glenigan’s economics team, there is an indication that construction activity upturn is gathering momentum with growth estimated to be only 4% at the beginning of 2014 we are now seeing that the latest figures show a 7.4% increase.
A 10% rise in the value of projects was recorded by Glenigan starting on site during the first half of 2014, primarily driven by increases in private housing, industrial and commercial building projects.
Work volumes will continue to pick up across these sectors through the latter half of the year, with private housing set to rise by 14% and 28% growth predicted for industrial projects. The value of underlying office project starts is forecast to rise by 9%, building on the strong recovery seen over the last two years.
Commenting on the construction outlook, Allan Wilén, Economics Director at Glenigan, said:
“The industry’s forward pipeline points to sustained output growth during the second half of the year and into 2015. Renewed consumer confidence and the accompanying revival in the general housing market have emerged as key growth drivers for both construction activity and the wider economy.”
There has been rising political concern that the economic recovery is regionally unbalanced, with London soaking up growth and job creation. Certainly in construction terms, the capital was the fastest growing part of the UK during 2013, with the value of underlying project starts rising by 21%.
Growth limited to London?
While London has led the initial recovery, more balanced construction growth is expected for the latter half of 2014. Construction activity will remain firm in the capital, with high profile office projects such as the £500 million Scalpel and £340 million London Wall Place developments set to break ground, however stronger growth in starts is forecast elsewhere.
Central and northern England is expected to enjoy the strongest growth, as the rise in housing market turnover and mortgage availability spur private housing development.
Areas of Growth
Additionally, office project starts are anticipated to pick-up in major metropolitan areas as the demand for more quality office space spreads beyond the capital, such as the £100 million Central Square development in Leeds. Retail and leisure project growth is also expected to be widely spread across the UK as consumer spending picks up.
The focus of government capital expenditure on transport will broaden from rail towards road projects and this will lead to a more even spread of infrastructure work across England. As such, Glenigan forecasts an 8% rise in civil engineering starts in 2014 – on par with last year’s improvement.
In contrast, project starts are forecast to fall back in Northern Ireland, while starts are expected to remain subdued in Scotland as political and economic uncertainties prompt investors to delay decisions until after the independence referendum.
Download a copy of the Mid-Year Construction Review and Forecast 2014, here.