Logistics and office project starts both slipped back by 48% in 2023 compared with the previous year, but retail finished the year 6% up on 2022.
Latest figures from construction data specialist Glenigan, which tracks the value of work starting on site, show that logistics and offices declined by 20% and 17% respectively in the final quarter of 2023 against the preceding three-month period.
Retail, however, had a positive Q4, growing by 20% against the preceding three months.
The hotel and leisure sector increased by 119% against the preceding three months but fell back by 26% against the previous year.
Education project starts suffered, decreasing by 24% during Q4 2023 to stand 22% lower than a year ago.
But community and amenity starts experienced a period of strong performance, with the value of underlying project starts rising 6% against the preceding quarter, 28% higher than a year ago.
Health sector project starts dropped by 37% against the preceding three months to stand 41% lower than 2022 levels.
Civil engineering project starts slipped back 4% in Q4 2023, to sit 26% down on a year ago. This can be attributed to a significant drop in infrastructure starts, which tumbled by 30% against 2022 and 6% against the preceding three months.
Utilities starts remained flat against the preceding three-month period, standing 17% down against the previous year.
Taking non-residential project starts as a whole, Glenigan’s figures show a fall of 10% during Q4 2023, down by 34% on 2022 figures.
Residential sector
Meanwhile, the residential sector saw construction starts increase by 14% during Q4 2023 but 8% lower than 2022.
Private housing increased by 19% against the preceding three months but starts were 9% weaker than 2022 levels.
Social housing performed poorly on both counts, with work starting on site falling by 2% against the preceding quarter and 5% down on the previous year.
Across the residential and non-residential sectors, project starts nose-dived against the previous year, with the value of work starting on site down by one-fifth compared to last year.
Renewed confidence for developers
Glenigan economic director Allan Wilen said: “As expected, seasonal factors affected work commencing on site during the final quarter of the year. However, after adjusting for the Christmas wind-down, starts managed to edge slightly higher during these three months.
“This was partly driven by a modest rise in private housing projects, indicating that developers may be entering the new year with renewed confidence.
“Less encouraging were the declines in non-residential and civil engineering project starts, which have continued to weaken.”
Wilen said March’s Spring Budget would be hotly anticipated by the sector.
He said: “Many contractors will be expecting the government, especially in an election year, to clarify or update on the big infrastructure projects put forward in 2023, particularly following the rollback on HS2 plans last year, as part of a wider package to kick-start activity.”
Regional view
Regional performance was mixed. London stood out, with project starts rising by 29% during Q4, despite falling by 11% on the same period in 2022.
The South East also experienced relatively strong growth, increasing by 16% against the preceding three months but declining by 29% on 2022 levels.
The West Midlands and North East both performed well, with the value of starts increasing by 11% and 31% during Q4 2023 to stand 16% and 14% up, respectively, against the previous year.
The East of England experienced a poor performance, with the value of starts falling by 11% against the preceding three months and remaining 32% down against the previous year.
The value of starts in the South West fell against both the preceding quarter and the previous year, falling by 5% and 4%, respectively.
Scotland remained flat against the preceding quarter but stood 14% down on the previous year.
Some areas of the UK performed particularly poorly, including Northern Ireland and the East Midlands, where the value of projects fell by 39% and 51% on a year ago.
This was also the case in Wales, Yorkshire & the Humber, and the North West, which also suffered falls in project starts against 2022 levels.
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