POSTED BY GUEST BLOGGER MELISSA EVANS
In the UK there are whispers that the construction industry has turned a corner with a recent survey of the purchasing sector showing an increase for the fifth month in a row. The CIPS/Markit survey reported that in the third quarter in the UK there had been further overall improvement in order books and an expansion of output levels. With UK companies expanding their fleets and services the amount of positivity is running at its highest level since 2009. Some argue that output still is below its peak and there are estimates that around 150,000 construction workers are still out of work or working in alternative sectors.
Recovery began to show itself back in May when output for the construction industry was around 22% below the level in 2008 and private house building was around 38% below its previous records. According to the UK’s Office for National Statistics the industry is now only 14% down on its peak – so in real terms there is work to do but the figures are undoubtedly heading in the right direction. Even following the slight drop in growth during August – a month that historically has less movement – confidence in the future of the UK construction industry has not been dented and continues to grow.
With growth comes a skills shortage
One of the most obvious issues with the growing construction industry is that during the downturn many have moved to different lines of work, perhaps retired or are still unemployed. A skills audit survey from the Chartered Institute of Building – the leading institute in the UK for construction professionals – has indicated that the industry must face up to this shortage. The 2013 report discusses the role of apprenticeships, 90% surveyed highlighted this as an area of concern; and that apprentices were vital in plugging the skills holes developing in the industry. With this comes a very real worry that a lack of the correct skills within the industry could hinder the further growth of the industry over the next few years. In a move to counter this concern a number of new University Technical Colleges have been set up by the British Government to offer 14-16 years olds courses in construction and engineering. Sponsored both by traditional universities and UK contractors the courses offer both technical and academic training that is especially pertinent to the construction industry – so far all the courses have been over subscribed.
Cranes survey point to regional construction resurgence too
Tower cranes are traditionally a sight across many UK towns and cities and offer a very visual signal that construction, whether residential or commercial, is taking place. Apart from in London, during the downturn, they became a rare sight across the major regional cities of the UK and at the height of the downturn it was estimated that only 50% of tower cranes were in use. This figure has now moved back up to around 75% to 80% as they begin to be seen across skylines once more.
It’s interesting how they act as an excellent indicator as to the state of the construction industry as a whole. A new survey commissioned by Deloitte Real Estate has taken this one step further and conducted an audit of cranes across major cities in the UK – including Manchester, Birmingham, Leeds, Glasgow and Edinburgh. The aim of the report is to look at the resurgence of the construction industry and uncover the sentiment of UK developers. In comparison to last year the picture is, indeed, looking far more positive with development activity seeming to match the growth being seen in the British economy. There has been an 80% increase in new schemes getting underway in the last 12 months.
Growth is also encouragingly being seen across the board with both student accommodation and office space spearheading construction increases and city residential housing appearing back on the agenda for the first time since the recession. Industry experts are hopeful that from a commercial perspective the UK is on the cusp on a new development cycle which will see a number of new office space development schemes starting – something not seen since before the downturn in 2008. A rise in the need for student accommodation has also led developers to announce new projects across the key cities.
Manchester is seeing the greatest upturn in activity, closely followed by Glasgow and Edinburgh; but across the board rises are being reported. An increase in residential demand due to a number of housing initiatives launched by the British Government, along with continuing signs of an increase in the commercial property sector and renewed confidence from regional commercial real estate investors all point to continued development activity in the future for the UK.
