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24th September 2018
Image Source: Dandara Living
Housebuilding and infrastructure work is set to spearhead an improvement in Yorkshire Construction.
In the quarter to August 2018, Glenigan’s industry analysis shows that the underlying value of construction project starts fell 16%, but the planning pipeline suggests more reason for optimism.
In the 12 months to August 2018, the underlying value of detailed planning approvals in Yorkshire rose 20% driven by a strong increase in private and social housebuilding.
Glenigan’s economics director Allan Wilén says: “The marked rise in planning approvals indicates developers are also looking to strengthen their development pipeline in anticipation of future demand growth.”
Last year, housing was the strongest performing sector in Yorkshire according to Glenigan’s construction market data. The value of private housebuilding project starts rose 21%, while social housing work leapt 58% but a poor winter subsequently hampered Yorkshire’s housebuilding industry.
In the 2018 financial year, housing starts slumped 10% as work began on 9,331 homes according to the National House-Building Council.
However, housebuilding quickly recovered and NHBC data shows starts surged by 22% in the three months to July 2018.
“Given a significant improvement in detailed planning approvals in 2017 we anticipate a further improvement in project starts and output but this may not come through until next year,” added Mr Wilén.
This anticipated rise comes amid signs that Build-to-Rent (BtR) is having an impact. Research by Savills and the British Property Foundation shows 5,131 units complete, on site or in planning in Yorkshire so far.
This is the fifth highest total in the UK and is being led by companies such as Dandara, which has recruited Interserve to build 744 BtR units in a £70 million scheme in Leeds city centre.
Infrastructure work buoyant
Infrastructure work has been the only other significant growth area in the eight months to August 2018. Infrastructure project starts are up by 32%, while approvals have leapt by 54%.
The stimulus has been the start in the summer of 2017 on the YORCivil2 framework, which will run until at least 2021 and see spending of £1 billion in the region.
Other major infrastructure projects also moving to site include the Hornsea 1 windfarm and work on a section of the A63 Castle Street in Hull, which is being built by Balfour Beatty.
Major players, such as Balfour Beatty and Royal BAM, which won the most work in the 12 months to August 2018 with an order book totalling £183 million, dominate the region’s industry. The only regional player in the top 10 by orders was Henry Boot with £78 million-worth of work.
The only other sector to show a rise in work in the pipeline in the eight months to August 2018 was health, where construction project approvals edged up 6%.
The growth in housebuilding and infrastructure will be offset by weakness in other sectors this year and Glenigan is forecasting that the value of underlying starts will be flat.
However, by next year the work in the planning pipeline will have fed through and Glenigan anticipates that construction project starts will rise by around 5% in 2019.
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