Glenigan Construction Review: Major Projects Drag Down Construction Starts as Pre-Budget Nerves Kick In

Glenigan, one of the construction industry’s leading insight and intelligence experts, has released the September 2024 edition of its Construction Review.

The Review focuses on the three months to the end of August 2024, covering all major (>£100m) and underlying (<£100m) projects, with all underlying figures seasonally adjusted.

It’s a report which provides a detailed and comprehensive analysis of year-on-year construction data, giving built environment professionals a unique insight into sector performance over the last 12 months.

Averaging £9,751 million per month, work commencing on-site dipped 7% against the preceding three months to stand flat compared to a year ago.

This decline was attributed to a significant drop in major project-starts which fell back 23% against the preceding three months, despite increasing 13% compared to 2023. Conversely, underlying project-starts were down on the previous year despite inching up (+7%) on the preceding three months.

Main contract awards also faltered on the preceding three months’ performance, declining 21% in the three months to August to stand 7% lower than the same time last year.

Detailed planning approvals plummeted 37% against the previous year, as well as falling back 11% against the preceding quarter.

Commenting on the Review, Glenigan’s Senior Economist, Yuliana Ivanykovych, says, “The UK construction industry is showing signs of recovery, with a rise in private housing and infrastructure starts underpinning a 7% starts increase compared to the preceding three months. Confidence is returning to the private residential market, which will come as good news for investors and developers alike. However, we must be mindful of the sluggish growth of the national economy, with recent flatlining GDP figures indicating that market caution still reigns supreme.”

She continues, “The recent strong spell for infrastructure may not last, especially as we’ve registered a slowdown in major projects, despite their value growing year-on-year. This may be caused by short-term sector trepidation as contractors await clarity from the Government’s Autumn Budget.”

The sector-specific and regional index, which measures underlying project performance, saw modest growth during the three months to the end of August 2024.

Residential construction maintains growth

Residential construction remained a bright spot, with underlying project-starts increasing 22% on the preceding three months, despite an 8% dip year-on-year.

Private housing developments saw a robust 30% rise as investor confidence improved, although these figures still lag 4% behind last year’s numbers.

Meanwhile, social housing starts remained sluggish, down 4% against the preceding three months to stand 21% below last year.

Strong civils performance

Civils work starting on-site experienced a particularly healthy period, posting impressive performance scores, rising 18% against the preceding three months and standing 9% up on the previous year.

This growth was largely attributed to impressive performance in the infrastructure vertical, with starts up by 31% against the preceding three months and by 36% compared with a year ago. A key contributor to this growth was the commencement of the new HS2 station at Old Oak Common in London.

These positive scores were tempered by sluggish utility starts, which decreased by 3% against the preceding three months to finish 23% down against the previous year.

Regional outlook

The East Midlands experienced a welcome 65% rise in starts against the preceding three months, standing 16% up against the previous year.

The South West and Northern Ireland also posted strong growth, with starts rising 20% and 32%, respectively, against the preceding three months, standing 6% and 36% up against the previous year. Starts in Northern Ireland were boosted by the commencement of a £150m industrial project in Antrim, Enkalon Business Park.

Scotland experienced a 20% increase against the preceding three months but remained 13% down on the previous year. Likewise, London saw a 10% increase against the Index period but was 8% down against 2023 levels.

Elsewhere, regional performance was poor. The value of starts in Yorkshire and the Humber and Wales declined by 19% and 6% during the three months to August and were 12% and 46% down respectively on a year earlier.

The East of England experienced a mixed period, increasing 18% against the preceding three months to stand 13% down on the previous year. The North East and the North West performed poorly, declining by 35% and 15% respectively against the previous three months, and standing 29% and 12% down against the previous year.

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