Construction starts down 24%

Published:  15 July, 2011

UK: The underlying value of UK construction project starts was 24% lower for the three months to June compared to the same period in 2010 according to the latest data from construction industry analyst, Glenigan.

Hotel construction in London fell 73% year on year. "Last year saw a surge in hotel starts as clients pulled forward projects to ensure completion before the Olympics. The current lull is forecast to be temporary with the budget hotel chains expansion plans underpinning future growth" commented Allan Wilen, economics director, Glenigan.

Retail was the only sector to buck the trend with a 13% year-on year increase as the major supermarket chains press ahead with their expansion plans. "The supermarkets continue to get good value for money from the construction industry as it competes fiercely for new work," said Mr Wilén.

Industrial and office construction starts were down 35% and 20% respectively as investors remain cautious against the backdrop of the weak economy and high inflation. Civil engineering project starts were 29% down due to a continued decline in infrastructure developments and a volatile utilities sector.

Residential construction was down 29% year on year as a result of private and public sector cuts. Private housing project starts were down 31% year-on-year, while social housing was down 26%.

"Housebuilders continue to be reluctant to start new sites and are focused on completing existing developments as the housing market remains sluggish. However, the Government's Firstbuy programme will help to bridge the mortgage gap for first-time buyers and Glenigan forecasts that private house building will stabilise by the end of 2011. In contrast social housing will decline further as a result of continued public sector cuts," commented Mr Wilén.

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