UK Construction Industry Buoyant with £7bn worth of contracts awarded in February
The latest report from leading construction industry intelligence provider, Barbour ABI, reveals that more than £7bn worth of contracts were awarded and a pipeline of £12.4bn worth of planning applications were approved in February.
The Residential market continued its steady recovery, with £2.3bn of contracts awarded in February, but the surprise package was the Hospitality and Leisure, which reached more than £1bn of contract awards for the first time since March 2021. The £600m contract award for the One Berkeley Street Hotel in London was the single largest contract and the first mega-sized hotel project in almost a year.
The report also looks at planning approvals and the picture for the future of construction in the UK is looking good. Following a slow month in January, February saw more than £12bn worth of planning applications given the green light.
Infrastructure projects saw the biggest activity in the month with applications for £5bn worth of projects approved. This is the highest figure recorded for infrastructure projects since November 2016 and is driven by the increased demand for renewable power sources. The single largest project is the Norfolk Vanguard offshore wind farm, which is valued at £2.7bn, but there are also several other major projects, including battery storage facilities, solar farms, and onshore wind farms.
The Residential sector also performed well in terms of planning approvals, with £3.8bn worth of requests given the go ahead. This figure is higher than the £3.5bn monthly average seen in 2021 and shows the continuing robustness of the residential housing sector.
Large scale projects at the University of Portsmouth and a high school in Fife made for a good month for education projects with planning applications worth £500m approved.
Planning applications are also holding up well with £9.5bn worth of projects proposed in January. The bulk of this is down to residential applications, which totalled £4.6bn but once again applications for renewable power facilities gave a boost to the applications in the infrastructure sector, with proposals for £1.9bn worth of projects lodged. A solar farm in Yorkshire with a value of £125m and a wind farm in Scotland valued at £120m are two notable examples.
Tom Hall, Chief Economist at Barbour ABI, said: “The planning environment continued to go from strength to strength in February as sentiment moved in line with the improving Covid19 situation. Contract awards continued their record run over the last 6 months or so, with the most impacted sector of hospitality and leisure starting to show signs of life.
“The race to renewable energy generation is also fuelling considerable growth in related infrastructure construction projects; we can be confident that this is a trend that will continue for some time.
“While the outlook is not uniform across industry sectors or across the country, the results from February are encouraging and give us confidence that 2022 should be a good year for the construction industry as these projects in the planning pipeline turn into output. The demand for new buildings and facilities along with the willingness to invest in such projects is a very positive sign. However there remain several risks that may disrupt the commercially sensitive sectors recoveries: a record tax burden, high debt and rising inflation for consumers, further Brexit-related trade barriers coming into force, and recent events in Ukraine causing further product shortages and inflation as well as increasing geopolitical instability.”
Barbour ABI releases its Snap Analysis every month and is available free of charge to interested parties. To read this month’s report in full, or to subscribe to receive future reports, click here.