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How did the construction market shape up in Q1 2019?

Like many industries, the construction sector is one that fluctuates depending on the wider economic climate. So how did the construction market shape up in the first quarter of 2019? We’ve looked at the latest Economic & Construction Market Review from Barbour

Q1 at a glance

  • Slight decline in overall contract awards however industrial and infrastructure remain positive.
  • London retained dominant region with 27.1% of contracts awarded.
  • Redevelopment and refurbishment projects dominate with civil engineering the largest sub-sector.
  • Value of contracts awarded to commercial and retail sector up 21.7% compared to the previous quarter.
  • Hotel, leisure and sport growth trend continues with 9.7% increase.
  • The warehousing & storage sector accounted for a majority share of contract awards in February with 61.8%.
  • The North West dominates the industrial sector with 30.4% share of contract awards.
  • Medical & health sector sees a further dip in contract awards.
  • Colleges/universities was the largest share of education contracts awarded with a 44% share.

 

Types of Project

The residential sector dominated over other sectors with 42.3% share. Despite only having a share of 13.9%, the infrastructure sector was the second most popular type of project.

The largest residential contract award was the £250 million redevelopment of Chelsea Barracks which is a total of 88 residential units in a single 5 storey structure. The largest infrastructure contract was the £110 million redevelopment of the former Royal London Hospital site in Tower Hamlets to provide a new civic centre and council offices.  

Types of projects. Source: Barbour ABI

Projects by region

Looking at the construction sector by region, London had the biggest share of the contracts awarded with 27.1%. London also had the largest contract award which was the £250 million Phase 4 of the Chelsea Barracks redevelopment to provide 88 residential units, as well as gym and leisure facilities.

Despite Scotland coming in at 6th place, the second largest contract was awarded in this region with the £150 million redevelopment of Jordanhill College in Glasgow.

Locations of contracts awarded. Source: Barbour ABI

Industrial construction

Working extensively within industrial/warehouse construction, we like to keep on top of the sector and there was a 38.7% increase in warehouse/storage compared to Q1 in 2018. The region with the largest share of contract awards was the North West with 30.4% share and the largest industrial contract award for the region was at Haydock near St Helens. Valued at an estimated £49 million and awarded to McLaren Construction the project will involve the construction of a new 48,434 sq m industrial unit with offices as well as landscaping and parking facilities.

Type of projects awarded. Source: Barbour ABI

What’s next for the construction sector?

The Chancellor announced a number of initiatives in the most recent Spring Statement which could affect the construction sector. Some of these included:

  • An additional £260 million for the Borderlands Growth Deal taking the total up to £362 million of potential Government investment in the Borderlands area of England and Scotland.
  • A new £3 billion Affordable Homes Guarantee scheme to support the delivery of around 30,000 affordable homes.
  • Announcement of the publication of a National Infrastructure Strategy alongside the Autumn Budget.
  • Introduction of a Future Homes Standard by 2025 which will see requirement for all new homes built from 2025 onwards to have low carbon heating systems.

 

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