East Midlands and the East of England are expected to see the biggest growth in work in 2017 as London and the south east slow down and development kicks in across the country.
These are the findings of the latest Glenigan forecast for construction for 2017 which found that although London initially led the way in construction activity and project starts in 2016, the capital has fallen back and is set to be eclipsed by regions in England such as East Midlands and East of England. Other areas such as north-west of England and the Midlands will see modest growth.
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In 2016, new work and project starts in London fell by around 15%, with this continuing to fall in 2017. However, regions such as East Midlands and East of England are expected to lead the way in work, with the East Midlands predicted growth of around 15% in 2017 while East of England is expected to grow by around 8-10%.
In particular, the forecast predicts real opportunities next year for office construction and expansions outside of London, which has slowed in the last year.
According to Allan Wilen, economics director at Glenigan, there will be a lot of shift and uncertainty in the construction industry over the next few years, particularly in the office sector.
He said: “There’s a big regional shift going on, tenants in London have the greatest exposure to uncertainty from the Brexit vote and possible passporting of workers in the future, this makes a lack of confidence in tenants. This will feed through and dampen activity.
“But if you look elsewhere the development pipeline is strong, further afield in the regions is where we’ve seen the growth in planning approval for offices and demand for offices is expected to continue to be strong. There’s been a lack of supply in the regions for some time, so this is starting to catch up. There will be real opportunities elsewhere.”
The report said that although the economic impact of the result of the referendum was lower than expected, it found that overall, the value of underlying project starts declined by 4% this year and a similar level of decline is expected next year. But this follows on from two years of strong growth, it is within this period that further changes in regional activity is expected.
Only three sectors are expected to grow in terms of new orders in 2017. Civil engineering leads the way, with the sector expected to rise by 12%, closely followed by the industrial sector at 9% and the hotel and leisure sector at 3%.
Those that are expected to decline the most over the next year are the retail and social housing sectors, both by 17%, followed by education, falling by 10%.
In the private housing sector, 2017 is expected to be impacted by the average earnings growth, which is expected to be moderate giving the slowing in UK economic growth. This will lead to housing market activity and private starts in 2017 to be little changed, with the value of project starts slipping 3% following the 2% decline this year.
