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31/01/2018

Construction activity ‘resilient’, says Deloitte

Words: Laura Edgar
Office construction / Shutterstock_77042365

Regional UK cities have reported ‘record levels’ of construction activity, according to Deloitte’s Real Estate Crane Survey UK.

The report series monitors construction activity in Belfast, Birmingham, Leeds and Manchester. Deloitte said each one has seen a sustained or increased level of development across a number of sectors, such as offices, residential and retail.

The Birmingham Crane Survey identified 24 new construction projects started on site in 2017. Breaking it down, 13 residential schemes were started, an increase of 30 per cent compared with 2016. This will deliver 2,500 new units in 2018. Student housing schemes were up by 53 per cent and set to deliver a total of 1,782 bed-spaces, and office space totalling at least 1.4 million square feet is currently under construction.

Manchester’s city centre residential sector exceeded 2008 levels for the second year running, with 20 new schemes starting construction in 2017. Across the 41 housing schemes, 11,135 units will be delivered to market, with six residential schemes set to exceed 25 storeys on completion. Five new office developments bring the total office space currently under construction to 1.5 million square feet.

In Leeds the number of homes under construction across the city centre hit 1,586 units across five development sites. The higher education sector saw four new starts, equating to over half a million square feet in the development pipeline. Leeds saw three new office construction starts in 2017.

The Belfast Crane Survey, now in its second year, has recorded nine new schemes and a total of 25 schemes under construction. Hotels dominate Belfast’s figures with more than 1,000 new hotel rooms currently being built – all due for completion this year – the highest number of any of the cities in the survey.

Simon Bedford, partner and regional head at Deloitte Real Estate, said: “Residential development stands out this year. The surveyed cities have shown a marked increase in housing development, in some cases doubling activity from the previous year. Our UK crane survey data shows a collective total of nearly 17,000 residential units currently under construction in these cities, ensuring housing targets are being taken seriously and developers are striving to meet demand.”

Additionally, the survey series has considered Dublin for the first time. It suggests that the city has over four million square feet of office space under construction, as well as 3,528 residential units.

The results of our crane surveys “reflect the growth and resurgence” in the regions Bedford concluded. “The unparalleled scale and volume of development is backed by significant investor confidence, strong business communities and an influx of new talent. The demand for property, particularly in the residential market, has never been more evident.”


Reaction:

Joe Thornton, founding director of Cast, a real estate and construction consultancy, said the survey shows how regional cities are continuing to go from strength to strength.

“However, the resilience of the industry should not lead to complacency on the industry’s part. As a sector, we must continue to look at innovative and efficient ways to deliver new homes throughout the country, taking a long-term perspective on the delivery method that seeks to plug the skills gaps and improve build quality. If we can’t address these issues, construction activity in the regions is likely to go south.”

John Assael, chairman of Assael Architecture, said the survey “shows the apparent resilience of the UK and Ireland’s construction industry in the face of systemic challenges such as Brexit and the skills crisis”.

“While regional growth is always welcome, the results do mask deep-seated issues with the current delivery and procurement methods of the construction industry, which were emphasised with the collapse of Carillion. Construction activity may still be buoyant in the UK’s regional cities, but as skills shortages and uncertainty begin to bite, the industry’s flaws will become increasingly apparent,” Assael warned.

The crane survey is “a demonstration that the government's 'devolution revolution' is paying dividends,” Johnny Caddick, said managing director at Moda and director at Caddick Group.

“In order to remain competitive, the regions will have to avoid the same housing pressures that London faces while also offering the same job opportunities, which as the figures show, they are more than capable of doing, which will aid student retention rates and in turn, long-term growth prospects."


Image credit | Shutterstock

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