Hold onto your hard hats - construction demand set to 'rocket'

Forecast shows improvements in construction market opportunities

Demand for construction work across the UK is set to ‘rocket’ following a string of positive forecasts.

Accountancy firm, KPMG, has issued a report suggesting opportunities within the sector are likely to improve, with the biggest upturn in workload for six years.

After so many years in the doldrums it is great to see further evidence of construction activity finally picking up

Richard Threlfall, KPMG’s UK head of infrastructure, building and construction, said: “After so many years in the doldrums it is great to see further evidence of construction activity finally picking up. Sentiment across business has decisively shifted, with the positive outlook helping to drive higher construction output. It is particularly encouraging to see the improvement not only in the residential sector, but in the commercial and civils sub-sectors as well.”

Tender prices bottomed out in the first half of 2012, according to figures from the RICS’ Building Cost Information Service. But it expects tender prices to grow slowly from this year, with steep increases expected by 2018 due to projected growth in demand. Prices grew particularly strongly in the fourth quarter of 2012, up 6.4% on the previous quarter and in the first quarter of this year were still significantly up on the previous year, by 5.6%.

In the healthcare market specifically, construction analysis agency, Glenigan, reports there are currently just over 780 hospital projects in the pipeline of various sizes. Of these just 15 are for major new hospitals worth more than £100m, with just one of those having already started on site. A total of 176 of the hospital schemes are worth more than £5m, with 111 involving refurbishment. All the rest are lower-cost contracts mainly involving the refurbishment or extension of existing facilities.

The primary care sector is expected to prove particularly lucrative over the coming months as GPs modernise the estate to coincide with the take-over of NHS commissioning duties. Glenigan reports around 820 health centre and surgery projects in the pipeline, with 71 on site already. Most of these are in the £1m-5m band.

Much has been made of public sector cuts and the impact upon various sections of the economy, especially the construction industry. However, this sector has shown that it does not just rely on government funding to sustain activity

Changes to the healthcare marketplace are also providing opportunities within the social care sector as the Government pushes to keep patients out of hospitals and living independently in the community. This means there is likely to be continued investment in specialist care and nursing homes.

A Glenigan spokesman said: “The level of health building is closely linked to the funding of the NHS. Much has been made of public sector cuts and the impact upon various sections of the economy, especially the construction industry. However, this sector has shown that it does not just rely on government funding to sustain activity.”

Threlfall added: “While there’s been a lot of scepticism as to how quickly the market would recover, history suggests that, once the mood changes, construction demand will rocket. Time to hold onto your hard hats.”

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