City centre housing developments have dominated construction activity across the UK’s key regional cities, according to the Deloitte Regional Crane Surveys.
The report, which tracks activity in Belfast, Birmingham, Leeds and Manchester, showed there were 63 new starts during 2023, down from 74 reported for the year before.
Of last year’s new starts, 28 were residential, with more than 3,862 homes delivered to market in 2023, a sharp drop on the 6,590 homes brought forward in 2022. More than 25,284 homes remain under construction across the four cities, up from 21,558 recorded at the end of 2022.
John Cooper, partner in real assets advisory at Deloitte, said: “Construction is one of the barometers for economic health and the industry has continued to show resilience despite macroeconomic challenges and higher borrowing rates.
“Developers and investors, working in partnership with local authorities and city planners, are creating places to live and work. New neighbourhoods have emerged and continue to take shape.”
Shift in city centre use
Manchester has been a trailblazer for city centre living over the past six years, with a total of 22,000 homes delivered. Last year a total of 2,402 new homes across 10 schemes completed, and a further 11,764 are under construction.
The survey has found that other regional cities are now showing an uptick.
Belfast has seen a 10-fold increase in activity, with more than 950 homes now under construction in the city centre, while Birmingham also had a strong year, recording a 36% increase in city centre residential developments under construction to 31 housing schemes comprising 8,848 homes. Buildings are also reaching new heights, with the tallest residential tower under construction at 51 storeys.
Meanwhile, student housing deliveries more than doubled year-on-year across the four cities, with 2,724 bedrooms completed in 2023 compared with 1,020 in 2022. There has also been a 40% year-on-year jump in the number of student homes under construction to 8,193 across the four cities in 2023.
The development of student homes hit a record for the second year running in Leeds, with 3,704 bedrooms under construction across 10 schemes.
Belfast saw nine schemes completed last year, adding more than 1,000 new student bed spaces across the city centre, with a further 774 due for completion this year.
Jennifer Chatfield, senior planner in the real estate team at Deloitte, said: “The diversification of city centres is key to driving footfall and, in turn, creating thriving and sustainable places that people want to visit and live in. Students and retained graduates play a crucial role in this.
“It is encouraging to see that developers are responding to the demand in the cities where students choose to work, rest and play. The challenge will be to deliver affordable student products, as well as the provision of amenities and social infrastructure to not only attract but retain the talent in its region.”
Office refurbishments surpass new-build
In 2023, the amount of office space under construction fell by 6% to 3.4m sq ft after 1.6m sq ft of workspace was completed during the year across Belfast, Birmingham, Manchester and Leeds – up mildly from 1.4m sq ft the year before.
Manchester reported the largest share of space under construction at 2.2m sq ft, of which refurbished office space made up 53% – the first time refurbishments have overtaken new construction. The move comes amid strong demand in sustainable and amenity-rich offices.
The highest volume of floorspace delivered to market of the four cities was in Leeds, which hit an all-time high with nearly 700,000 sq ft of office space across three schemes.
In Birmingham, nine office developments totalling 785,981 sq ft are currently under construction, in addition to the 591,134 sq ft of workspace that completed in 2023, suggesting investor confidence in the sector remains strong.
Rethinking the visitor economy
Turning to hotels, the number of bedrooms under construction fell by 10% across the four cities to 1,918, while 2023 completions were down to 584 bedrooms.
The survey noted the addition of one new hotel development in Belfast, two under construction, and a healthy pipeline of nine hotels with planning permission.
One hotel is also under way in Birmingham.
In comparison, 1,504 hotel bedrooms came on the market in 2022, with all of them delivered in Manchester.
Cooper said: “While there is still much to do, the past few years have paved the way for quality place-based regeneration and positive change across our regional cities. Looking ahead, there is a healthy development pipeline to match demand too.
“We predict some softening in construction activity as costs move through the supply chain, but this will not trigger a significant drop-off in activity. Demand for new forms of living, working and leisure will continue to drive activity over the medium-term in the central areas of these four regional cities.”
Image © Alexander Pohl/Shutterstock
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