Jane Embury, director, gets into the Festive spirit by taking a positive peek ahead.
It’s the season to be jolly, so let’s try to be a little bit jolly.
For a start, according to consultants PWC, all sectors of the economy can expect a return to growth in 2021.
This will be aided by the delivery of mass vaccination. That will have an enormous impact on economic and social activity.
Not least, it will provide a huge boost to national confidence – whether an individuals, families, communities or companies.
It’s likely that the healthcare, hospitality and transport sectors will lead growth in 2021. PWC projects GDP growth in 2021 to range between 6.0% and 3.4%.
There are other positive signs. For example, the number of businesses created in the third quarter of this year was about 5% higher compared to the same period last year.
Specifically in the building sector, the Glenigan Construction Industry Forecast 2021-2022 provides an authoritative look at the year ahead.
First, the bad news. It estimates that the value of underlying project starts (with a construction value of less than £100 million) dropped by 46% during the second quarter of this year against a year earlier.
However, the good news is that the third quarter saw a sharp rebound in construction output and project starts. The value of underlying project starts rose by 19% during the quarter.
Glenigan forecasts a gradual, but sustained recovery over the next two years, despite Brexit and recovery from Covid-19.
By 2022, the value of underlying starts is forecast to total £49.3 billion, just 3% below 2019 levels.
But there are likely to be changes in the types of construction activity. For example, there is likely to be a rise in refurbishment projects. Tenants and landlords will have to adapt their premises to accommodate changed working practices.
In contrast, new build office projects are likely to be slower to recover. Developers will first have to assess any structural shift to continued remote working.
There will also be renewed growth in social housing starts in 2021, supported by increased investment from housing associations.
Glenigan also anticipates growth in school building projects in 2021 and 2022 as local authorities tackle a shortage of secondary school places.
An increase in further education work is also anticipated as FE colleges press ahead with approved projects.
In the health sector, promised increases in NHS capital funding is expected to lift project starts over the next two years. Glenigan forecasts a rise in starts of 11% next year and 12% in 2022.
The government has also pledged to significantly increase investment in UK infrastructure and kick-start house building. We’ve cautiously welcomed that commitment.
However, we believe that long-term planning is needed to ensure that the rush to build doesn’t lead to inappropriate construction. We also believe that our towns and cities may look very different post-Covid-19 and could need some creative repurposing.
With local and national purse strings severely tightened, we also hope that the quality of civic architecture will be maintained.
However, wherever and whenever the construction sector recovers, our advanced glazing systems will be at the heart of both new and refurbishment projects.
With a track record across sectors, and with customers internationally, we look forward to whatever the new normal will look like. It can’t be any worse than 2020!
It’s been a year that nobody could have predicted, and one that we’ll all be glad to see the back of.
But there is now light at the end of the tunnel, for all of us, and specifically for the construction sector.