Today, Glenigan, one of the construction industry’s leading insight and intelligence experts, releases its widely anticipated UK Construction Industry Forecast 2024-2026. The key takeaway from this Forecast, which focuses on the next three years (2024-2026), is that the construction industry will face near-term challenges including weak economic growth, high interest
Balfour Beatty, the international infrastructure group, has announced that Nick Crossfield will join the Group later this year as CEO of its UK Construction Services business. Nick will be responsible for the strategic leadership of Balfour Beatty’s UK Construction Services business, delivering on its business plans with a focus on further
The Royal Town Planning Institute (RTPI) has stated that, while it supports efforts to manage the UK’s housing crisis, policy interventions to get more people on the property ladder must come with adequate resources to the planning system. Victoria Hills, Chief Executive of the Royal Town Planning Institute, said:
BDC 321 : Oct 2024
Today, Glenigan, one of the construction industry’s leading insight and intelligence experts, releases its widely anticipated UK Construction Industry Forecast 2024-2026. The key takeaway from this Forecast, which focuses on the next three years (2024-2026), is that the construction industry will face near-term challenges including weak economic growth, high interest rates, and disruptions caused by the General Election. These factors are expected to further constrain private-sector investment and delay public-sector projects. However, the outlook brightens over the forecast period. The early election will reduce political uncertainty, while a strengthening economy is expected to boost consumer and business confidence from H2 2024. This signals recovery in the not-so-distant future, with a modest increase in project-starts predicted in the latter half of 2024 lifting starts by 3% this year. As the economy picks up further in 2025, Glenigan forecasts 7% growth, and 6% in 2026. Disruption stifles short-term growth Construction starts have remained sluggish during the first six months of 2024, as high interest rates and a weak economic outlook dented investor and consumer confidence. The General Election has also affected the pipeline of public-sector construction projects. The purdah period has disrupted the progress of public-funded projects, while decisions will also be delayed post-election as the new government reviews existing programmes such as the Lower Thames Crossing. Starts on the up However, an easing in borrowing costs and improved economic conditions – with the UK economy forecast to grow around 0.8% in 2024 – together with greater political certainty, should help to lift investor confidence from the second half of 2024 and into next year. Despite a tough start, renewed growth in project-starts is forecast for H2 2024. The gradual easing of interest rates is also expected to feed through to lift housing market activity from the second half of this year. Further, the Spending Review will set out the new government’s funding commitments and priorities and is expected to strengthen public sector construction activity during the second half of the forecast period. Commenting on the Forecast, Glenigan’s Economic Director Allan Wilen says, “The UK construction sector is still facing significant headwinds as the economy struggles to pick back up. However, there are signs of growth in several key areas, particularly in the private verticals, signalling a gradual recovery from mid-2024. In the private housing sector, for example, we anticipate starts will pick up in the latter half of this year, driven by improved affordability and brighter economic prospects. “Similarly, we’re forecasting improved activity in consumer-related verticals such as retail and hotel & leisure, as a gradual easing in price inflation is set to provide a boost to households’ spending power. Elsewhere, structural changes are expected to create new opportunities in office refurb and fit-out, while logistics is poised for renewed investment fuelled by online retail growth. However, he acknowledges the upcoming General Election will have a significant upfront impact on industry performance, particularly in the public sector, “Public-funded investment is expected to stagnate in the near term. The election has disrupted the progress of many projects, with the purdah period leading up to the 4th of July preventing civil servants from making any announcements that could influence voting intentions. As a result, decisions will be delayed until post-election. For example, the Department for Transport has already announced that ministerial decisions on several major projects, including the Lower Thames Crossing, have been pushed back by six months. This means we’ll have to wait until the new Government’s Spending Review for further clarity on budget allocation, and this might not be until Q.4 2024.” Taking a deeper dive into sector verticals… Private housing set to rebound Housing market activity fell sharply in 2023, with the value of project-starts dipping 11% as housebuilders reacted to weakening market conditions and more stringent building regulations. Private housing starts are predicted to experience slow growth over the forecast period, with Glenigan predicting a 2% rise in 2024 as the market environment gradually picks up. An increase in mortgage approvals in March 2024 (the highest in 18 months) points to a strengthening in house sales in the coming months. Renewed project-starts recovery is also anticipated in the second half of the forecast period, rising 14% in 2025 and 6% in 2026, as interest rates dip and consumer confidence improves. Social housing stabilises The forecast for social housing is mixed, with starts predicted to experience modest growth over the next three years, with a slight dip in 2025. Greater stabilisation to previously eye-watering construction materials costs in 2024 is expected to boost the sector, with a 4% rise forecast for 2024. Student accommodation starts are expected to stagnate significantly over the forecast period, due to the government’s visa restrictions on graduate schemes which will likely weaken demand for purpose-built student accommodation. Having been a key driver of sector growth in 2023, this is anticipated to slow down sector recovery. Glenigan is forecasting a slight decline (-1%) in 2025, however, increased government funding for social housing provision, a major political priority, is expected to lift starts by 7% in 2026. Slightly brighter outlook for industrial The industrial sector is experiencing a period of consolidation following a boom post-pandemic, largely driven by significant growth in warehousing and light industrial projects. Looking forward, industrial project-starts are expected to remain weak for the rest of the year, before returning to growth in 2025. A decline in consumer spending caused the online retail market to lose momentum, tempering the demand for logistics space. Meanwhile, manufacturing output has also been subdued, limiting investment in facilities. Nevertheless, as the economic outlook and household finances improve, the sector should see renewed growth fuelled by the demand for warehousing and logistics. Consequently, Glenigan is forecasting a 3% growth in 2025, and 4% in 2026. Utilities to boost civil engineering A sustained rise in civil engineering starts is anticipated over the next three years, driven by an increase in utilities projects as energy and water companies roll out planned investments. Overall, civil engineering starts are forecast to grow
Balfour Beatty, the international infrastructure group, has announced that Nick Crossfield will join the Group later this year as CEO of its UK Construction Services business. Nick will be responsible for the strategic leadership of Balfour Beatty’s UK Construction Services business, delivering on its business plans with a focus on further developing its presence in the growing infrastructure market – including the energy, defence and sustainable transportation sectors – as the partner of choice for notable customers and clients such as SCAPE, the Environment Agency, the NHS and Rolls Royce, as well as local authorities. Nick will sit on the Executive Committee and report directly into Group Chief Executive, Leo Quinn. Having studied Mechanical Engineering at Reading University, Nick has over 40 years’ experience within the industrial and engineering industries, starting his career as a graduate with BAE Systems, and going on to work with British Steel, Network Rail, and Siemens. Currently Nick is the Managing Director of Alstom Transportation’s UK and Ireland business, a role he has held since 2015. Leo Quinn, Balfour Beatty Group Chief Executive Officer, said: “I am delighted to welcome Nick to Balfour Beatty. “He brings with him a wealth of experience working directly with Government on behalf of industry, as well as a strong track record of managing large businesses, successfully delivering sustainable profitable growth, and navigating highly regulated environments with a focus on driving operational improvements. His experience and understanding of the markets in which Balfour Beatty operates makes him perfectly positioned to lead our UK Construction Services business.” Commenting on his appointment, Nick Crossfield said, “I very much look forward to joining Balfour Beatty. I have watched with interest over the last ten years as the Group has continued to position and win work in its core markets and I look forward to continuing the successful delivery of national and local infrastructure across the UK”. Balfour Beatty’s UK Construction Services business consists of three business units: Scotland, Buildings – responsible for the delivery of construction projects in the aviation, health, defence, education and development sectors in England, and Civils – responsible for delivering civil engineering projects across the transportation (highways, public realm, and rail), flood and coastal defence, and industrial and energy sectors in England. As well as specialist brands Balfour Beatty Living Places, Balvac and Balfour Beatty Homes Building, Design & Construction Magazine | The Choice of Industry Professionals
The Royal Town Planning Institute (RTPI) has stated that, while it supports efforts to manage the UK’s housing crisis, policy interventions to get more people on the property ladder must come with adequate resources to the planning system. Victoria Hills, Chief Executive of the Royal Town Planning Institute, said: “We are currently dealing with a severe housing crisis, with an urgent need to build more affordable homes and help young people get onto the property ladder. “But we need to ensure these are the right homes, built in the right places. Our planning system, which would play an essential role in delivering these houses, can do more to make homeownership achievable and affordable, and to provide a wider range of affordable housing options. However, this can only happen if there is a step change in funding for the next UK Government provides funding to councils to deliver high-quality planning services” Building, Design & Construction Magazine | The Choice of Industry Professionals
