3rd April 2025

Glenigan, Powered by Hubexo (Glenigan), has released the April 2025 edition of its Construction Index, offering a detailed and comprehensive analysis of construction activity during the three months leading to the end of March 2025.

The edition focuses on underlying projects valued at £100 million or less (unless otherwise specified), with data seasonally adjusted to provide an accurate reflection of sector trends against the preceding three months. The report also gives built environment professionals a unique insight into sector performance, comparing this year’s data against the same period last year.

The April edition reveals a concerning decline in construction activity, with the value of projects starting on-site during this period dropping by 19%, and remaining 16% lower than the same period in 2024. This downturn points to reduced sector confidence, as developers increasingly hesitate to push forward with new projects.

However, not all sectors experienced negative growth. Community and amenity projects were a relative bright spot, showing a rise in both quarter-on-quarter and year-on-year comparisons, suggesting some resilience in public-facing developments.

Commenting on the outlook at the start of the year, Glenigan’s Allan Wilen said: “The latest data confirm investors’ loss of confidence. Whilst seasonal factors provide a lift to starts during the first quarter against the preceding three months, starts were 16% lower than a year ago. Developers have become more hesitant to take forward projects since the turn of the year, amid a stalled economy and heightened geopolitical uncertainty. Public sector projects have also weakened during the first three months of 2025. However, increased government capital funding from April should help lift sector activity over the coming months.”

Sector analysis – residential

The residential sector experienced significant declines across both private and social housing projects. Overall, residential construction starts decreased by 12% compared to the preceding three months and were also 12% lower than the same period in 2024.

Private housing construction starts saw a decline of 11% against the previous quarter and 9% compared to the same period last year, reflecting the continued caution in the housing market. Social housing starts experienced a steeper drop, decreasing by 15% against the preceding three months and standing 20% lower compared to the same time in 2024. The additional funding announced in the Spring Statement will hopefully help unlock both stalled social and private housing projects over the coming months.

Sector analysis – Non-residential

The non-residential construction sector presented a mixed picture in the first quarter. Community and amenity projects experienced a rise of 5% over the preceding three months and a 1% increase compared to the same period in 2024. A £21 million development at Catterick Garrison in North Yorkshire was a significant contributor to this growth.

However, other non-residential sectors struggled. Industrial project starts saw a sharp decline of 28% compared to the previous quarter and were 7% lower than the same period last year, reflecting reduced investment in this area. The health and retail sectors also faced significant downturns, with health construction falling 35% against the preceding three months and 36% year-on-year, while retail dropped 34% from the previous quarter and 37% from 2024.

Office construction showed more mixed results, declining 8% compared to the previous quarter but rising 3% compared to last year. Hotel and leisure projects had a particularly difficult quarter, falling by 30% against the previous three months and standing 28% lower than the same period in 2024. The education sector also struggled, with a 24% decline from the previous quarter and a 39% year-on-year decrease.

Sector analysis – Civil engineering

Civil engineering projects saw a significant decline in Q1, dropping 28% compared to the previous quarter and 16% year-on-year. Infrastructure projects fell by 14% from the prior quarter but showed a slight 12% increase compared to last year.

In contrast, utilities experienced a sharp downturn, with starts down 43% compared to both the preceding three months and 2024.

Regional outlook

Regional performance across the UK varied widely in the first quarter. The North East was a standout performer, seeing an increase of 6% over the preceding three months and standing 17% higher compared to the same period last year.

This growth was driven by several major projects starting in the region. In contrast, the South West experienced a more mixed performance, declining 14% from the preceding quarter but seeing a modest increase of 3% year-on-year.

Northern Ireland, however, saw a sharp decline, with project starts down 43% from the previous quarter and 11% lower than the same period in 2024. London and the South East both experienced decreases in project start, with London down 10% and the South East down 11% compared to the preceding three months. Both regions also faced significant year-on-year declines, with London falling 40% and the South East dropping 18%.

The weak start to Q1 2025 points to a tougher competitive landscape ahead for the construction sector. The data highlights the importance of strategic planning to navigate these challenges. However, there is some optimism, as the infusion of government funding, starting in April, is expected to help stimulate activity across key sectors and provide opportunities for growth in the coming months.