Glenigan’s
Construction Outlook for 2018 forecasts that the value of underlying new work
project starts is set to fall by 5% this year and a further 1% in 2018, driven
partly by continued declines in private housing and new office work.
The forecasts
reflect the more cautious mood in the industry, particularly in London.
Land Securities, the
UK’s largest property developer, recently said it was no longer making large
new purchases or starting new speculative development, partly due to Brexit
uncertainty.
The latest Deloitte
London Office Crane Survey showed construction had fallen by 9% over the past
six months although demolition levels remain at around 8 million sq ft,
pointing to a desire to keep developing.
However in the
education sector - after a steep decline this year - activity is set to rebound
fairly strongly in 2018, when Glenigan is forecasting a 10% rise in the value
of project starts. Construction on secondary schools is set to rise, reflecting
the growing number of pupils particularly in larger cities, and expansion by
the universities which will mean continued growth in student accommodation
spaces.
The University of
Huddersfield, where Morgan Sindall is building the new £30 million home for
art, design and architecture and the University of West England, which is
building a new £20 million engineering centre at its Frenchay campus, are among
the higher education institutions which are involved in significant new
developments.
Meanwhile, the
industrial sector is also poised to see continuing growth as the spread of
online retailing increases the demand for logistics and distribution space.
After a 17% rise in the value of new project starts in 2017, Glenigan is
forecasting a further 6% rise in 2018 to £3.639 billion. In addition to the
current buoyant level of activity in the sector, major new projects are
continuing to come forward. Tenders are currently being invited for Mulberry
Developments’ £64 million Midlands Logistics Park in Northants, with work set
to start in the New Year.
Another bright spot
is the hotel and leisure sector. It continues to benefit from the boost to
overseas tourism in the UK which the lower pound has brought as well as the
upturn in domestic holidays. Following a 9% increase in the value of hotel
& leisure project starts this year, Glenigan is forecasting a marked, 20%
rise in starts in 2018 as investment in the sector gathers momentum.
Hotel renovation
also remains a major source of work, particularly in London. Shiva Hotels’ £36
million hotel conversion at High Timber Street in the City and its £30 million
hotel at Great Marlborough Street are both currently at the pre-tender stage. Meanwhile,
Z Hotels’ planned £8 million conversion of a site at Wild Court in Camden is
set to start next Spring.
