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Construction in the UK - Key Trends and Opportunities to 2023

Construction in the UK - Key Trends and Opportunities to 2023

Construction in the UK - Key Trends and Opportunities to 2023

Summary

Construction activity in the UK was weak in 2018, owing to weak business confidence as a result of the UK’s planned exit from the EU (Brexit). Poor investor confidence, coupled with sluggish economic growth, reduced construction activity in a number of sectors, particularly commercial buildings. Consequently, the country’s construction industry grew by just 0.3% in real terms in 2018; this was preceded by an annual growth of 7.1% in 2017 and 4.1% in 2016.

Weak economic growth and high levels of risk to business operations relating to Brexit will continue to constrain construction activity during the early part of the forecast period. Uncertainty over the UK’s future outside of the EU continues to unnerve investors, and at the time of writing there was still no agreement on how and when the UK would leave the EU and complete the Brexit process. The deal proposed by the outgoing prime minister, Theresa May, was rejected three times by parliament, resulting in May’s announcement on 24th May 2019 that she would step down as prime minister. This has exacerbated political and economic uncertainty relating to the outcome of the Brexit process, further undermining investor confidence in the near term of forecast period.

Based on an assumption of a relatively benign scenario of a managed exit from the EU, under a withdrawal agreement that includes a transition period to allow business time to adjust to a new trade and investment environment, GlobalData’s central forecast for the UK’s construction industry is one of marginal growth in 2019-2020. The outcome of actually agreeing a deal to manage the UK’s exit from the EU - and thereby avoiding a “no deal” scenario - would potentially result in a bump in confidence among investors, after three years of uncertainty over how and when the UK would eventually leave the EU. There would still be some downside risk, with the most direct impact on the construction industry being via upward pressure on costs and availability of construction materials and labor. Around two-thirds of construction materials used in the UK are imported from the EU, and contractors currently have a heavy reliance on migrant labor to build a workforce of skilled and unskilled labor.

Assuming a Brexit deal is reached that limits the disruption to the UK’s economy, the construction industry’s output value in real terms is expected to rise at a compounded annual growth rate (CAGR) of 2.49% over the forecast period, compared to 3.93% during the review period (2014-2018).

GlobalData’s Construction in the UK - Key Trends and Opportunities to 2023, report provides detailed market analysis, information and insights into the UK’s construction industry, including -

  • The UK’s construction industry's growth prospects by market, project type and construction activity
  • Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in the UK’s construction industry
  • Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.
  • Key Highlights
  • GlobalData expects the residential construction market to record a forecast-period CAGR of 5.07% in nominal terms in 2023, supported by the government’s efforts to build houses to meet rising residential property demand. In October 2018, the government announced plans to provide 300,000 houses annually, starting from 2020. Moreover, in the 2018 budget, the government allocated GBP500 million (US$643.5 million) to build 650,000 houses.
  • Energy and utilities construction market’s growth over the forecast-period will be driven by the government’s focus on renewable energy. The government aims to produce 50% of the total electricity demand from renewable sources by 2025. Accordingly, the government aims to produce 170Twh of electricity by 2025. Moreover, in March 2019, the government announced plans to generate 30% of the total country’s electricity demand from offshore wind by 2030.
  • The government aims to increase the spending on research and development (R&D) from 1.8% of the total budget in 2017 to 2.4% by 2027, and also plans to attract GBP80 billion (US$99.7 billion) of public and private sector investment towards R&D by 2027. The government also plans to invest GBP725 million (US$966.5 million) to support innovation by providing technical support to companies in the country during the period of 2017-2027. Moreover, the government allocated GBP2.5 billion (US$3.2 billion) under the Investment Fund to provide financial support.
  • GlobalData expects the institutional construction market to record a forecast-period CAGR of 3.29% in nominal terms 2023, driven by the government’s focus to develop healthcare and educational infrastructure. Under the Priority School Building Program 2, the government plans to rebuild 277 school buildings by 2022. Moreover, in December 2018, the government revealed plans to build 100 schools across the country with an investment of GBP2 billion (US$2.7 billion) by 2023.
  • The total construction project pipeline in the UK - as tracked by GlobalData, and including all mega projects with a value above US$25 million - stands at GBP557.1 billion (US$742.7 billion). The pipeline, which includes all projects from pre-planning to execution, is skewed towards late-stage projects, with 69.1% of the pipeline value being projects in the pre-execution and execution stages as of July 2019.
  • Scope

    This report provides a comprehensive analysis of the construction industry in the UK. It provides -
  • Historical (2014-2018) and forecast (2019-2023) valuations of the construction industry in the UK, featuring details of key growth drivers.
  • Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
  • Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
  • Listings of major projects, in addition to details of leading contractors and consultants
  • Reasons to buy
    • Identify and evaluate market opportunities using GlobalData's standardized valuation and forecasting methodologies.
    • Assess market growth potential at a micro-level with over 600 time-series data forecasts.
    • Understand the latest industry and market trends.
    • Formulate and validate strategy using GlobalData's critical and actionable insight.
    • Assess business risks, including cost, regulatory and competitive pressures.
    • Evaluate competitive risk and success factors.


    • Executive Summary
    • Construction Outlook: At-a-glance
      • Table Construction Outlook
      • Table Figure 1: Key Markets, Construction Output Growth Matrix and Risk Matrix
      • Table Figure 2: The UK, Construction Projects Pipeline by Sector (GBP Billion)
    • Latest News and Indicators
      • Table Figure 3: The UK, Housing Price Index
      • Table Figure 4: The UK, Construction output value (GBP Million)
    • Key Drivers and Risks
      • Economic Performance
        • Table The UK, Key Economic Indicators
      • Political Environment
      • Demographics
      • Risk Profile
        • Table Figure 5: The UK, Risk Profile
        • Table Figure 6: The UK, Risk Comparison
    • Construction Outlook
      • All Construction
        • Outlook
          • Table Figure 7: The UK, Construction Output Value (Real, US$ billion, 2017 prices and exchange rate)
          • Table Figure 8: The UK, Construction Output Value, Growth Matrix
          • Table Figure 9: The UK, Construction Output Value, by Sector (GBP Million), 2014-2023
        • Project analytics
          • Table Figure 10: The UK, Construction Projects Pipeline, Projected Annual Spending by Stage (GBP Million), 2018-2023
          • Table Figure 11: The UK, Construction Projects Pipeline, Value by Stage (GBP Million)
          • Table The UK, Construction Output Value (nominal, GBP Million)
          • Table The UK, Construction Output Value (nominal, US$ Million)
      • Commercial Construction
        • Outlook
          • Table Figure 12: The UK, Commercial Construction Output by Project Type (GBP Million), 2014-2023
        • Project analytics
          • Table Figure 13: The UK, Commercial Construction Projects Pipeline, Value by Stage (GBP Million)
          • Table Figure 14: The UK, Commercial Construction Projects Pipeline, Projected Annual Spending by Stage (GBP Million), 2018-2023
          • Table The UK, Top Commercial Construction Projects by Value
      • Industrial Construction
        • Outlook
          • Table Figure 15: The UK, Industrial Construction Output by Project Type (GBP Million), 2014-2023
        • Project analytics
          • Table Figure 16: The UK, Industrial Construction Projects Pipeline, Value by Stage (GBP Million)
          • Table Figure 17: The UK, Industrial Construction Projects Pipeline, Projected Annual Spending by Stage (GBP Million), 2018-2023
          • Table The UK, Top Industrial Construction Projects by Value
      • Infrastructure Construction
        • Outlook
          • Table Figure 18: The UK, Infrastructure Construction Output by Project Type (GBP Million), 2014-2023
        • Project analytics
          • Table Figure 19: The UK, Infrastructure Construction Projects Pipeline, Value by Stage (GBP Million)
          • Table Figure 20: The UK, Infrastructure Construction Projects Pipeline, Projected Annual Spending by Stage (GBP Million), 2018- 2023
          • Table The UK, Top Infrastructure Construction Projects by Value
      • Energy and Utilities Construction
        • Outlook
          • Table Figure 21: The UK, Energy and Utilities Construction Output by Project Type (GBP Million), 2014-2023
        • Project analytics
          • Table Figure 22: The UK, Energy and Utilities Construction Projects Pipeline, Value by Stage (GBP Million)
          • Table Figure 23: The UK, Energy and Utilities Construction Projects Pipeline, Projected Annual Spending by Stage (GBP Million), 2018-2023
          • Table The UK, Top Energy and Utilities Construction Projects by Value
      • Institutional Construction
        • Outlook
          • Table Figure 24: The UK, Institutional Construction Output by Project Type (GBP Million), 2014-2023
        • Project analytics
          • Table Figure 25: The UK, Institutional Construction Projects Pipeline, Value by Stage (GBP Million)
          • Table Figure 26: The UK, Institutional Construction Projects Pipeline, Projected Annual Spending by Stage (GBP Million), 2018-2023
          • Table The UK, Top Institutional Construction Projects by Value
      • Residential Construction
        • Outlook
          • Table Figure 27: The UK, Residential Construction Output by Project Type (GBP Million), 2014-2023
        • Project analytics
          • Table Figure 28: The UK, Residential Construction Projects Pipeline, Value by Stage (GBP Million)
          • Table Figure 29: The UK, Residential Construction Projects Pipeline, Projected Annual Spending by Stage (GBP Million), 2018-2023
          • Table The UK, Top Residential and Mixed-Use Construction Projects by Value
    • Key Industry Participants
      • Contractors
        • Table The UK, Key Contractors
        • Table Figure 30: The UK, Headquarters of Key Contractors (% of Total Project Pipeline)
        • Table Figure 31: The UK, Headquarters of Foreign Contractors (% of Project Pipeline with Foreign Contractor)
      • Consultants
        • Table The UK, Key Consultants
        • Table Figure 32: The UK, Headquarters of Key Consultants (% of Total Project Pipeline)
        • Table Figure 33: The UK, Headquarters of Foreign Consultants (% of Project Pipeline with Foreign Consultants)
    • Appendix
      • What is this Report About?
      • Definitions
        • Table GlobalData Construction Market Definitions
        • Table Construction Risk Index Ratings and Scores
    • About GlobalData
      • GlobalData at a Glance
        • Table Figure 34: GlobalData at a Glance
      • GlobalData Construction
      • Disclaimer
      • Contact Us

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