Deloitte’s Regional Crane Surveys noted a slowdown in development activity across its four cities, with construction inflation costs, influenced by global economic factors, challenging the sector.
The crane survey series monitors construction activity in the central areas of Belfast, Birmingham, Leeds and Manchester.
In 2024, the four cities recorded decreased levels of new construction starts compared with the previous survey, with 47 schemes breaking ground, compared with 63 in 2023.
However, ongoing activity remained strong, with the cities recording a total of 130 schemes under construction across a range of sectors including offices, residential, hotels, retail, education, and student housing.
Of the 47 new starts, 22 were in the residential sector, 11 were offices - with a focus on refurbishments, nine were student housing schemes, and three were hotels. There were zero new starts in retail / leisure and education.
Following four consecutive annual increases in the number of residential homes under construction, this year’s survey saw an 7% decrease on previous surveys (23,673 in 2024 vs. 25,370 in 2023).
In the office sector, a 17% year-on-year decrease was noted in the volume of office space under construction (2.8m sq. ft. in 2024 vs. 3.4m sq. ft. in 2023).
The student housing sector recorded a 2% rise in the number of bedspaces under construction (8,664 in 2024 vs. 8,500 in 2023).
John Cooper, infrastructure and real estate partner at Deloitte, said: “Our latest regional crane surveys underlined that while levels of residential, office and student schemes under construction remain healthy, there has been a clear reduction in the number of new schemes breaking ground. This reflects the challenging economic and geopolitical backdrop that is impacting investment and a willingness for the construction sector to take on risk.
“We expect a recalibration in the year ahead as developers and construction companies weather the economic fluctuations and adapt to the shifting landscapes around them. There remains a healthy construction pipeline across the four cities, with ongoing dynamism in the residential sector, while appetite for student housing is enduring.
“The challenge for developers and investors, as well as local authorities, is to continue to facilitate schemes that will enable growth in these cities, creating liveable, well-connected and thriving environments. However, while costs to build and get schemes moving are prohibitive, we would not expect levels of new developments to immediately rebound.”
Exploring the key cities, the crane surveys monitor construction activity in:
Belfast
There were five new starts in 2024 in Belfast, two fewer than in 2023. 144,000 sq. ft. of office floorspace is under construction, a 20% increase on 2023.
Belfast also saw one new hotel scheme brought to market and one new hotel scheme start on-site. The survey reported signs of a potential new wave of hotel developments, with over 2,000 hotel rooms in the planning pipeline.
As for student housing, there was a 13% rise in the number of bedspaces under construction (1,224 in 2024 vs. 1,081 in 2023), and a modest rise in the number of completions compared to the previous survey (1,081 in 2024 vs. 1,073 in 2023).
Birmingham
Turning to the Midlands, in Birmingham 3,180 homes completed in 2024, the highest amount in the crane survey’s history. However, across all construction sectors the 11 new starts were the lowest recorded number since 2020. This was despite the survey having an expanded boundary to align with the definition of the city centre in Birmingham City Council’s new ‘Our Future City Plan’, in 2024. 36 developments remain under construction.
Elsewhere, office and student residential sectors are showing strong levels of floorspace under construction. The survey recorded 2,242 student accommodation bedspaces under construction, the highest level recorded by the Birmingham Crane Survey. Over 310,000 sq. ft. of office floorspace was delivered in 2024 and a further 814,574 sq. ft. is under construction.
Leeds
In Yorkshire, Leeds saw 11 new schemes on site, below the Leeds Crane Survey average of 14, representing a third consecutive year of declines, and the lowest since 2013.
Eight of the new schemes are residential or student housing, following two bumper years of delivery in the sector. There are 24 sites currently under construction, with 19 completions recorded in 2024. There were 1,361 homes completed in the city centre in 2024 and a further 4,185 under construction.
There are two offices and one new hotel scheme on site, while there was no new activity in the hospitality, retail and leisure, education, healthcare or transport sectors.
Manchester
Manchester continued to lead the way in new construction starts. Of the 47 new starts recorded across the four cities, 20 were in Manchester.
Whilst this marks a third year of decreased new starts, reaching the lowest point since 2014, overall activity levels remain strong and completion figures, with 27 projects delivered, represents a significant increase from the previous year.
Of the new starts, over half (11), were new residential schemes, with six in the office sector. There was one new student housing schemes, and one new hotel.
Manchester saw just under 1.1m sq. ft. of office space delivered to market in 2024, with 1.5m sq. ft. still under construction. In residential 4,448 homes completed construction, and there are 10,788 homes under construction and set to be delivered over the next four years.
Zoe Davidson, infrastructure and real estate partner at Deloitte said: “Looking at the residential sector, rental growth has continued to rise across the four cities, with Manchester leading the way in terms of the number of homes under construction. However, it’s important to note that measures such as the Building Safety Act, which, while essential, have added complexity and lengthened timelines for the delivery of residential projects.
“Our results show that no new build traditional offices started construction in 2024. This is despite a robust occupier demand for large-scale, modern, adaptable, and sustainable offices that can serve the needs of tomorrow’s workforce. With headline rents unable to keep pace with construction inflation, refurbishments are continuing to dominate construction activity in the office sector.”
