Construction-start performance remained weak in the three months to April, as economic contraction continued to offset industry growth, while planning approvals have shot up.
Work commencing on-site fell by 13% against the preceding three months to stand 36% lower than a year ago, according to insight firm Glenigan.
Main contract awards also faltered on the preceding three months’ performance, declining 10% in the three months to April and standing 28% lower year-on-year.
However, detailed planning approvals rose sharply against both the preceding quarter and the previous year, advancing by 65% and 27%, respectively.
Glenigan economic director Allan Willen said: “While recent forecasts have made for sobering reading, the dramatic uptick in detailed planning approvals should be welcomed, indicating that work is once more streaming back into the pipeline.
“However, with a 12th consecutive hike in interest rates, the road to recovery is set to be a rocky one, evidenced by poor project-starts performance and another fall in main contract awards. We will have to wait for these rates to soften considerably before we see a semblance of a return to normal levels of activity.”
Planning revival
Glenigan highlighted a strong pipeline of housing work, buoyed by an uptick in upcoming major projects, including a £600m 868-flat development in Southall, north London, and a £500m 1,350-flat development in Leeds.
Overall, detailed planning approvals were up by 20% on the preceding three months. This was led by major residential projects of £100m and above, with approvals doubling against the previous quarter and up by 79% on the previous year. Approvals for schemes below £100m fell by 8% on the previous quarter and 22% year-on-year.
Offices and hotels & leisure also saw approvals rise.
Offices increased by 8% on the preceding three months and 31% compared with last year. Once again, major project approvals were the main contributor to this growth, increasing by 58% against the preceding three months and 56% compared with a year ago.
For hotels and leisure, detailed planning approvals doubled during the quarter to stand 54% up on the previous year. In this case, sub-£100m approvals increases were a major contributor, rising by 47% against the preceding three months and up by 27% against the previous year. Major projects approvals also spiked, posting figures 10 times higher than the previous quarter, growing by 98% on a year ago.
Sub-£100m project approvals also increased for industrial projects, rising by 35% (seasonally adjusted) on the preceding three months and 19% against the preceding year, providing a boost to the development pipeline. Major health planning approvals posted significant growth during this period, almost quadrupling against both the previous quarter and previous year.
Finally, civil engineering detailed planning approvals more than quadrupled against the preceding quarter to stand double the value of last year’s figures. This was due to massive growth in major projects, with approvals increasing six-fold against the preceding three month-period and more than doubling on the previous year. Underlying approvals also advanced by 22% during the three months to the end of April to stand 33% higher than a year ago.
Project starts remain subdued
Despite the upbeat news on planning approvals, the rest of Glenigan’s May Review paints a picture of underlying project-start decline across almost every sector.
Residential on-site starts fell by 18% during the three months to the end of April to stand 44% lower than a year ago.
Private housing was down by 23% against the preceding three-month period, with starts slashed in half (-51%) compared with 2022. Likewise, social housing project starts were weak, but fell less dramatically, dipping by a modest 6% against the preceding three months to stand 10% down on last year’s figures.
Non-residential project starts declined across the board, with the exception of education.
Starts on industrial projects fell by 32% during the three months to April to stand 46% lower than a year ago. Offices were similarly affected, with the value of underlying project-starts falling back 39% against the preceding three months, finishing 54% down on last year.
Retail also fared poorly, with the value of project-starts weakening against both the preceding three-month period and the previous year, declining by 27% and 47%, respectively.
Health starts, having rallied during Q1, also fell sharply, dropping 49% against the preceding three months, 52% down on a year ago.
Hotel & leisure (-41%) and community & amenity (-23%) starts decreased compared with the preceding three months, leaving them 32% and 41% down on the previous year, respectively.
Once again, civils performance slipped back, this time 18% lower than the preceding three months and 31% down on a year ago.
Regional performance
Regional performance suffered, with most areas of the UK experiencing a weakening in project-starts during the three months to the end of April.
Wales was the only region to experience growth against the previous year, increasing by 13%, but falling back 12% against the preceding three months.
The North East suffered the heaviest decrease, falling by half during the three months to April to stand 27% down on a year ago. The South East also performed poorly, with the value of project-starts declining sharply during the three months to April to finish 42% down against the preceding three-month period and 50% lower compared to 2022.
Project-starts in London and the South West weakened, slipping back 12% and 20%, against the preceding three months respectively, to stand 32% and 43% lower than a year ago. Yorkshire & the Humber saw the value of project-starts tumble by 28% against the preceding three months, remaining 38% behind 2022 levels.
Similarly, Scotland experienced a decrease against both the preceding three months and previous year, with the value of project-starts slipping back 11% and 38%.
The East of England, Northern Ireland, the East Midlands, West Midlands, and the North West all suffered significant falls in project-starts compared to the preceding three months and previous year.
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