Strong development pipeline shows brighter prospects for construction

A rise in project starts during the first quarter suggests brighter prospects for the construction sector, according to Glenigan.

According to the latest Glenigan index, the value of work starting on site in the three months to March was 5% up in the preceding quarter. Although starts were 13% lower than a year ago, research by the analyst shows that the industry is stabilising.

After a winter of disruption caused by flood and waterlogged ground, the areas worst affected at the turn of the year have seen the sharpest turnaround in project starts.

There is double digit growth in the value of projects starting on site in the North West, West Midlands, East of England and Scotland during the first quarter.

A strong private sector development pipeline is expected to boost tendering opportunities over the coming months.

The value of work securing planning approval in the first quarter is nine percent up on a year of planned projects, driven by an increase in private sector schemes, with the development pipeline of private housing, industrial and office projects particularly strong.

Glenigan’s Economics Director Allan Wilén said: “Private investor confidence will be key. Near term we anticipate that some private sector investors will defer their final commitment to proceed with planned projects until after June’s EU referendum. Nevertheless we anticipate that there will be a rise in projects going out to tender over the coming months as clients’ line up work to start in the second half of the year.

“Accordingly while the impending vote is likely to dampen project starts in the near term, the second half of 2016 could see a sharp rise in activity as private investors press ahead with projects once the issue of EU memberships has been resolved.”

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