DUBLIN--(BUSINESS WIRE)--The "United Kingdom Construction Industry Databook Series - Market Size & Forecast by Value and Volume (area and units), Q2 2024 Update" report has been added to ResearchAndMarkets.com's offering.
The construction industry in the United Kingdom is expected to grow by 4.5% to reach GBP 168.60 billion in 2024. A CAGR of 4.3% is projected during 2024-2028, with the country's construction output expected to reach GBP 199.20 billion by 2028, indicating substantial growth potential.
This market intelligence report offers a comprehensive view of market opportunities in the building and infrastructure construction industry at the country level. With over 100+ KPIs covering growth dynamics in building and infrastructure construction, construction cost structure analysis, and analysis by key cities in the United Kingdom, this databook provides a wealth of data-centric analysis with charts and tables, ensuring stakeholders are fully informed.
Despite near-term challenges in certain construction sectors, the United Kingdom's construction industry is poised for significant growth. The industry is expected to grow steadily over the next four quarters, with the growth momentum continuing over the forecast period.
The UK's construction industry faces a mixed outlook, with growth driven by government investment in infrastructure and a shift towards sustainability. However, challenges such as high inflation, interest rates, and regulatory changes pose risks, especially in the residential and commercial sectors. Recovery and growth are anticipated by 2025, with a focus on larger projects, innovative solutions, and government support.
The Residential Construction Outlook
- Residential output continues to be the most negatively impacted new build segment, while infrastructure remains the strongest. The UK remains below its target of adding 300,000 homes per year, with only 230,000 added in 2023.
- Mortgage rates are set to remain well above pre-pandemic levels, and house prices are at risk of slipping as low fixed-rate mortgages end. Developers may think twice before starting new projects due to challenging conditions.
Government Support and Funding
- The government renewed its Affordable Homes Programme for 2021-2026 with a £12.2 billion multi-year settlement, the largest cash investment in affordable housing in 10 years. The 2020 Budget also allocated £1.1 billion from the Housing Infrastructure Fund to build 70,000 new homes in high-demand areas.
- Additionally, authorities in England's 20 largest cities and towns will now follow a "brownfield presumption" if housebuilding drops below expected levels, benefiting residential construction firms.
The Commercial Construction Outlook
- The UK's commercial construction sector has seen a slight decline in activity over the past few months, driven by high inflation and rising interest rates.
- However, there is cautious optimism for a rebound in 2025 as the industry focuses on larger projects and innovative housing solutions, possibly with government incentives leading up to elections.
- Investor caution is widespread due to uncertainties, leading to delays in major capital expenditure decisions. The sector is also grappling with rising labor and material costs, although there has been a slight easing in material costs, providing some relief to project budgets.
The Institutional Construction Outlook
- The institutional construction sector in the United Kingdom has encountered major challenges in the past few months, mainly due to economic uncertainty and increasing costs.
- Despite challenges, there's cautious optimism for a rebound in 2025. The sector will focus on larger projects, innovative solutions, and sustainability. Government infrastructure spending and the Affordable Homes Programme may support growth.
- However, labor shortages and rising material costs continue to pose hurdles, requiring strategic adjustments and careful financial management. Recovery and growth potential exist as the sector navigates these complexities and seeks new opportunities.
The Industrial Construction Outlook
- Geopolitical uncertainties and regulatory changes influence procurement and planning. Despite a subdued short-term outlook, potential for recovery and growth exists as the sector navigates challenges and seeks new opportunities. Despite challenges, recovery and growth are expected by 2025. The sector is adapting by focusing on larger projects, innovative solutions, and infrastructure development. Material costs are easing, but labor shortages and rising costs remain concerns.
The Infrastructure Construction Outlook
- The UK's infrastructure construction sector has remained resilient despite economic challenges. The government plans to invest £700-775 billion in infrastructure over the next decade, with £379 billion already confirmed. The investment will primarily focus on energy and transportation projects, accounting for about 70% of the spending.
- Factors contributing to this outlook include easing material costs and improved employment rates, likely leading to enhanced project delivery times. Major investments in digital infrastructure, such as the £960 million Connections Action Plan to improve the national grid, are anticipated to attract further private investment.
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