"Extreme weather conditions exacerbated the seasonal lull combined with the slowdown in government investment resulted in one of the lowest monthly total project starts in years" commented James Abraham, Economist, Glenigan. Residential projects were 31 per cent down, non-residential 20 per cent down and civil engineering 50 per cent lower than the same period a year ago.
Looking to 2011, construction projects starts will fall by 7 per cent this year compared to 2010 according to industry analyst Glenigan. The fall follows a 6 per cent year on year increase in the value of construction project starts from 2009 to 2010 that was primarily fuelled by the private sector.
Looking ahead, private housing, industrial, office, retail and civil engineering projects starts are expected to grow, while social housing, hotel & leisure, education, health and community & amenity project starts are forecast to decline. "The impact of planned Government investment cuts is clear with only rail avoiding the axe and increasing private sector confidence not quite strong enough to counter Government cuts," commented Allan Wilen, Economics Director, Glenigan.
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Office developments will see the strongest growth of 41 per cent year on year as developers respond to increasing demand from tenants plus rising capital and rental values, particularly in central London. "Little new floorspace came onto the market in the recession and the shortage of quality office space will worsen as the recovery gathers momentum," observed Mr Wilen.
Strengthening UK manufacturing, improved investor confidence, rising property capital values and fall in available floorspace will boost industrial construction project starts by 29 per cent year on year. The sector was hit particularly hard by the financial crisis and economic recession with project starts falling 60 per cent over the last three years.
Retail construction is forecast increase four per cent year on year following a very strong 2010. The major supermarkets will continue to expand throughout 2011 with retailers and landlords expected to increasingly refurbish existing premises in an attempt to increase footfall and consumer spending.
The hotel & leisure sector will see a 24 per cent year on year decline in new construction project starts as the 2012 Olympics related boom seen in 2010 fades with the majority of Games related projects now underway.
(CD/KMcA)
