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South-east market sees fall in starts

Further decline forecast for first and second quarters of 2009, followed by ‘modest recovery’

The south-east construction market has contracted sharply during the past few months after years of boom, according to Glenigan.

Growth in the education and health sectors helped offset some of the decline, but Glenigan recorded a 14 per cent fall in the value of underlying construction starts across the region in 2008.

In terms of starts on sites, the only sector that showed a reasonably strong performance in February was social housing, with £30 million worth of work starting, more than the previous two months combined.

Tricky start

January was a hard month for detailed planning approvals, with overall value falling to £178 million, although starts on site were at a five-month high.

The value of construction starts is forecast to fall 24 per cent in the first quarter of 2009 compared with the same period last year, and by 17 per cent in the second quarter.

During 2008, underlying planning approvals in the civil engineering sector were very low, having dropped in value by 68 per cent. The industrial, offices and private housing sectors also had significant declines in the value of underlying planning approvals.

The key large contracts for the region include a £601 million road improvement near Dunstable, Bedfordshire, and the £200 million area 3 Managing Agent Contract.

The region has suffered from a number of delays in large public sector projects. Last week reported that Buckinghamshire County Council had delayed naming a winning contractor for its £96 million energy-from-waste facility. The winner was due to be revealed at the end of 2008.

But there are some grounds for optimism. Project starts are forecast to be above the poor levels seen in the final quarter of 2008, and Glenigan says it expects construction prospects in the region to show signs of improvement as the year progresses.