Construction sector sees a glimmer of hope going into 2024

The latest Glenigan Forecast predicts an increase in office starts, social housing construction, civil engineering, private housing and utilities work in the next year — providing a cause for optimism across the construction industry.

The forecast predicts a 6% in office starts national this year, with a further 13% in 2025. 

Meanwhile, Glenigan data showing a strong office development pipeline in London — with underlying approvals worth around £1.5bn over 2023 — suggests the outlook remains positive.

In addition, Glenigan believes that the value of underlying industrial project starts overall will increase by 17% this year and by a further 21% in 2025.

Any early reductions in interest rates should bolster the growing demand for warehousing and logistics space which is driving demand in the sector.

The drive for more affordable homes also bodes well for opportunities in social housing construction activity.

Glenigan is forecasting a 7% rise in underlying social housing project starts this year, followed by a further 5% increase in 2025.

Meanwhile, the prospect of lower mortgage rates should speed up the pace of recovery in private housing construction.

Contractors in the civil engineering sector — where Glenigan is forecasting a 17% rise in underlying project starts in 2024 followed by a 5% increase in 2025 — should benefit from more utilities-related work, particularly in water, electricity generation and distribution, and broadband connectivity.

Glenigan data shows that detailed planning approvals for utilities work were worth £6.9 bn in the three months to November — around seven times the level in the period a year earlier and which augurs particularly well for activity in the sector in 2024.

Construction on building projects for universities is one area helping to keep contractors busy in education-related work; a sector where Glenigan is predicting a 13% rise in project starts in 2024.

In the three months to November, project starts for universities were worth £283m, nearly triple the level of the period a year earlier and accounting for almost a third of the work started across the education sector.

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