The construction industry anticipates a modest increase in activity due to upcoming elections and a strengthening economy, according to a significant report.
- A forecasted increase of 3% is expected in projects under £100m by the end of 2024, driven by investor confidence.
- Hotel and leisure construction sectors are predicted to see a remarkable 14% growth, contributing to the industry’s recovery.
- Despite growth in some areas, industrial and education construction starts are projected to decline this year.
- The retail sector is set to experience significant expansion by 2026, with a nearly 20% increase in activity.
The construction sector is poised for an upswing as the UK approaches an election period, with underlying construction activity expected to rise slightly this year. The anticipation of an early election coupled with a strengthening economy is believed to be a catalyst for increased investor confidence, as per a key report by industry intelligence specialists Glenigan.
In a detailed forecast, Glenigan projects a 3% rise in projects valued at under £100m initiating on-site within 2024. Looking further ahead, the report outlines a 7% increase next year, followed by a 6% rise in underlying workloads the subsequent year. This optimistic outlook is bolstered by predictions of significant growth in specific sub-sectors of the industry.
Glenigan highlights hotel and leisure construction as pivotal, with both sectors expected to expand by 14% this year. Health-related construction also shows similar growth potential, marking a noteworthy recovery trajectory. However, these advancements are tempered by a projected 12% fall in industrial construction starts and a 5% reduction in education-related schemes, reflecting a mixed outlook for the broader industry.
Private housing and office developments are set to gain momentum in 2025, forecasted to grow by 14% and 12% respectively. The most dramatic increase is anticipated in the retail sector, which is expected to surge almost 20% by 2026, underscoring a burgeoning area of focus for the construction industry.
According to Glenigan’s economic director Allan Wilen, despite facing significant economic headwinds, pockets of growth indicate a gradual recovery starting mid-2024. He suggests that improved affordability and economic prospects will accelerate activity, particularly in the private housing sector. Additionally, consumer-oriented sectors like retail and hotel and leisure are expected to benefit from an easing inflation environment, enhancing household spending power.
Wilen also notes the potential for new opportunities in office refurbishment and fit-out projects driven by structural changes, alongside increased logistics investments as online retail continues to flourish. The post-election period is of particular interest, with Wilen indicating that public sector purse strings may loosen once a new government is in place, which could initiate further spending and growth within the industry.
However, due consideration must be given to the ‘purdah’ period, preceding 4 July, which restricts civil servants from making announcements that could influence electoral outcomes. As a consequence, key decisions are likely postponed until after the election, with further clarity on budget allocations expected following the new government’s Spending Review in late 2024.
The construction industry is set for growth, driven by evolving economic conditions and impending government changes.
