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North West UK’s fastest-growing construction market

Construction activity in the North West has risen by 31% since 2016, according to a report by Turner & Townsend, making the region the UK’s fastest-growing market, but the consultant has warned high demand is pushing up construction costs.

The consultant’s latest UK Market Intelligence report said construction output in the region was up by 30.7% in the first quarter of the year, compared with the second quarter of 2016, with activity growing ahead of the West Midlands at 27.8% and the South West at 27.2%.

In London, construction activity dropped by 5.7% over the same period.

However, the consultant warned the North West, along with the South West and the West Midlands, were classified as “hot markets” where high demand and insufficient contractor supply have been pushing up tender prices.

Tender prices are forecast to grow by 2.2% in the North West, which Turner & Townsend said was “modest” given the flurry of work going on in the region.

This has given rise to an increase in single-stage tendering, which has risen by over 10% over the past 18 months, while two-stage tendering has dropped by 5% over the same time.

Turner & Townsend’s data correlates with results from Deloitte’s Crane Survey for Manchester, released earlier this year. The report pointed to “unprecedented” levels of construction across the city with 1.5m sq ft of office space now under construction, while the number of residential units under construction rose by 60% last year.

Meanwhile, Liverpool City Council expects £1.4bn worth of development to be delivered in 2018, followed by a further £970m next year.

Paul Connolly, Turner & Townsend director, said: “As market uncertainty continues to weigh heavily on the construction industry, output data in several regions gives early signs of a correlation between regional autonomy and resilience to the confidence-sapping impact of an uncertain political future.”

“Notwithstanding this increased appetite, clients need to remain cautious on what risk is actually being taken on and managed by contractors. The failure of Carillion and the rising number of insolvencies suggests risk transfer in the current environment can be illusory.”

The full report can be downloaded here.

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