Steady growth expected for industry output led by resurgent housing and infrastructure sectors.
Construction output is forecast to increase steadily over the next five years, according to the latest research from Leading Edge, with infrastructure, industrial and housing offering the brightest spots.
Meanwhile commercial remains a concern. Looking at the regional picture, London and the South-east will continue to take the largest share.
The latest forecasts from construction consultants Leading Edge reveal that output is set to grow in 2014 by 2.2 per cent after two years of decline.
There is reassurance that growth is set to bed in with stronger forecasts for the following three years. Output is set to grow by 3.5 per cent in 2015 and by over 4 per cent in 2016 and 2017.
“We’re being more cautious on housing as there are uncertainties around the level of demand and the response to it from the next government”
Mel Budd, Leading Edge
Hot spots for growth over the next two years include infrastructure and industrial, the only sectors forecast to see more than 5 per cent growth year on year in 2014 and 2015.
Within infrastructure, there are expectations that the struggling roads sector will bounce back when fresh government funding kicks in from 2015/16. Rail output is forecast to continue its strong performance.
Housing forecasts more cautious
Private housing is forecast for growth of 6.4 per cent in 2013, but later years are expected to see a slower rate of improvement than some commentators may have hoped for or indeed predicted.
Leading Edge managing director Mel Budd says the consultancy has been more cautious around its housing forecasts. “Everyone is talking about housing, but growth may not be as high as some think,” he says.
“For private housing, the North-east, Yorkshire & the Humber and Wales are struggling”
Mel Budd, Leading Edge
“We’re being more cautious as there are uncertainties around the level of demand and supply and the response to it from the next government.
“The big players have been very positive, but there are questions over whether they have the capacity in the short term to deliver a sharp jump in the number of new units required to meet the ever increasing demand.”
Orders offer encouragement
However, he highlights that housing new orders are on the up in most of the British regions, and that growth is there in the sector.
“Orders have also gone up for public housing,” Mr Budd says. “But the North-east, Yorkshire & the Humber, Scotland and Wales are still struggling.”
Demand in Wales is slow owing to the lack of a Help to Buy equivalent, though plans by the Welsh Government are in place to introduce a similar scheme.
Leading Edge’s regional forecasts across the construction industry reveal London and the South-east will take the lion’s share of the value of output in 2014.
“The shopping centre pipeline collapsed over the past two years and is now returning, albeit in historic terms from a very low base”
Mel Budd, Leading Edge
All regions, however, should experience improvement next year. The strongest growth rate is forecast for the North-east, but the region has been in decline since 2009, so any sharp improvement is largely due to this weak base.
Elsewhere, Yorkshire & the Humber and the South-west are set for stronger gains in 2014, while London and the South-east will return to growth after a fall this year, with Crossrail continuing to boost output.
Total output in the capital is set to decline this year due to commercial prospects not coming to fruition.
Commercial sector concerns
Once again, the commercial sector is among the dimmer prospects according to the forecasts. A decline of 6.5 per cent is predicted for 2013 overall, after a double-digit fall last year.
“It is the biggest sector, but it’s not really going anywhere,” Mr Budd says. New orders remain at low levels but retail in particular is a danger spot, though plans for larger developments are on the horizon.
“The continued growth in online retailing and so many empty shops on the high street are a concern,” Mr Budd continues. “But the shopping centre pipeline collapsed over the past two years and is now returning, albeit in historic terms from a very low base.”
Flagship development schemes, such as Westfield and the redevelopment of two of Croydon’s major shopping centres, are focused around London, though the £275m development in Bradford city centre is coming back on line.