Construction Industry Forecast 2022-2024
The Construction sector as a whole will have difficulties in the next few years. Significant economic uncertainty brought on by the conflict in the Ukraine is currently impairing output and stalling the post-COVID rebound. As a result, it is anticipated that overall project starts will likely decrease by 2% this year.
In addition to the ongoing war in Ukraine, continued rises in inflation, increased taxes, and rising mortgage prices are anticipated to limit activity in consumer-related industries including private housing, retail, & leisure.
It’s not all doom and gloom, there has been a healthy pipeline of work that we continue to see being progressed throughout 2022, with ongoing support from the Government in education, health and community positively contributing to a moderate 8% increase as a whole in 2023 prediction.
Looking back at 2021 we saw a healthy housing market which helped to lift new house building with starts hitting 26%. However with building supply shortages, mortgage costs and a lack of consumer confidence we have seen less starts and more focus on developments already on site. It is looking to be temporary with already clear signs of starts ramping up throughout the second half of 2022 with new starts expected to be around 14% in 2023.
The non-residential market has not been immune to the economic factors. With the pandemic causing a huge wave in e-commerce (anticipated to be a significant growth market) bricks and mortar stores were hit hard. With consumers looking to spend less, discount supermarkets such as Aldi & Lidl have been leading the way bolstering a predicted increase of 6% from 2022-24.
Hybrid & home working is the hot new trend since the pandemic with landlords and tenants somewhat left scratching their heads on where to spend. There is however a predicted growth of 11% over the forecasted period. Research suggests this is down to refurbishment projects due to changes in the working environment to accommodate the new ways of working.
Looking into the Public Sector there is only moderate growth expected here over the next few years with budgets being cut with an expected dip in 2022 of 10%. The hope is this is temporary due to a healthy pipeline of already approved projects to be worked on.
Keeping the civils and infrastructure in mind, a sizable funding increase in areas like roads, particularly to address the maintenance backlog on the country’s roads, is assisting in raising the value of project starts.
Overall, I believe that in the near future, we will have some overall stability as what has already begun on the site is completed and some fresh starts move forward.
The build-to-rent industry will aid future expansion. According to a recent Savills analysis, there is a lot of confidence in the build-to-rent industry, with investors focusing on certain areas of the UK and investing 2.5 billion so far in 2022.
At Bonnington Road Edinburgh there is, a $124,4 million development is now underway with Grahams serving as the principal contractor for the build to rent sector.
If you would like to have an informal chat about your current circumstances or any of our construction roles then get in touch with Martyn
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