Scotland sees resurgence in new construction activity

The second quarter of 2015 has seen commercial construction in Scotland continue to rise according to the latest JLL and Glenigan UK Commercial Construction Activity Index.

For the year to the end of June, total starts in Scotland amounted to £2.5Bn, representing an increase of 17.6%, making Scotland the second highest performing region in the UK, after the East of England.

The index shows that Scotland, along with the North West and West Midlands, are starting to see resurgence in new construction activity. The North West saw growth increase by 16.8%, with the West Midlands seeing a 9% rise.

London remains the focus of the UK’s construction industry, accounting for 25% of all UK construction activity. The South East was relatively flat in terms of construction growth, while the East of England was the strongest performer with a growth rate of 23%.

Ken Frew, Director of Building & Construction at JLL Scotland said: “For the second consecutive quarter, Scotland has proven to be one of the top two performing regions in the UK for new construction starts. This suggests that Scotland, like other major urban centres outside London including Greater Manchester and the Birmingham conurbation – are beginning to see the bounce back that had previously been concentrated in the South East.

“However it’s not all good news. Construction costs have risen steadily through Q2 2015 with contractor order books experiencing strong growth, particularly in Scotland’s big three cities. Confidence throughout key trades and supply chains has continued to dictate construction procurement activity with low risk two stage and negotiated appointments necessary to secure contractor programme commitment and product quality. Significant risk transfer is no longer feasible or commercially viable.

“A surge in post-election business and investment decision making was noticeable and is expected to result in increased construction activity in late 2015 and throughout 2016. This will continue to drive costs up and stretch the markets ability to deliver, particularly at short notice. Robust portfolio and project capital planning will be increasingly critical to businesses.”

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