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Roads help the South East out of the crunch

The impact of the credit crunch has seen a rapid reversal in fortunes for the South East’s construction industry. In 2008 private housing and offices underwent sharp falls in the value of underlying construction starts.

Glenigan recorded that the first quarter of 2009 also saw a 41 per cent decline year-on-year in the value of underlying construction starts in the region. This decrease in value was dragged down by the office, civil engineering and the private and social housing sectors.

On a positive note, several large road contracts have helped boost overall starts in the region. Most notably a £601 million road improvement near Dunstable, Bedfordshire and the £200 million Area 3 Managing Agent Contract.

An increase in public sector related construction starts have helped offset the weakening in private sector project starts. According to Glenigan the value of underlying education starts rose 9 per cent last year, while health projects were 73 per cent higher.

However, the office sector has weakened further in recent months, with the value of underlying project starts during the three months to March 2009 half that of a year ago. The start on site of several distribution warehouses boosted the value of industrial starts last year, but figures from early 2009 show the value of industrial projects starting on site was 68 per cent down on a year ago.

More difficulties have also been predicted for the region in 2009 as the flow of planning approvals continues to weaken in the South East.

Last year the value of underlying planning approvals fell by 31 per cent. The value of underlying projects securing approval during the three months to February 2009 was down by a third on last years figures. The private housing sector continues to lead the decline, with approvals 64 per cent lower over the same period.

This significant reduction in the flow of new projects is set to create numerous challenges for construction in the South East over the next six months. Glenigan are forecasting a further decline of 18 per cent during the year as a whole and predict a  modest recovery in project starts for 2010.

Project Focus:Nuclear Power Station

Client: EDF Energy

Contact: Richard Mayson, external affairs director, 020 7759 6000, info@edfenergy.com

Value: £2 billion

Details: Scheme comprises the construction of a new nuclear power plant. The project has several potential locations including Dungeness (Kent), Sizewell (Suffolk), Hartlepool and Heysham (Lancashire). A national planning statement on nuclear power will be made later in the summer identifying which sites will proceed.

Schedule: Work will start in January 2010 and will take 4 years to complete. The government expects the first new plant to be in operation in 2017.

Latest News: The land next to the existing Dungeness Power Station in Romney Marsh, Kent has been nominated for a new nuclear power station and a public consultation is underway.

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