Construction growth expected to be strongest outside London to end 2019

Major urban centres outside of London and the South East are emerging as safe bets for growth as key regional sectors show signs of bucking a weakening UK trend across construction.

Despite a slowing construction position forecast for the remainder of 2018 and into 2019, the northern powerhouse of #Manchester and Scotland’s second city, #Glasgow, look set to be better placed to ride the political uncertainty that the UK currently faces.

With growth forecast in logistic premises, education, student accommodation and civil engineering for 2018 and into next year, areas outside of London and the South East are expected to be among the strongest performing sectors. As major construction projects start, the North of England is expected to be a significant beneficiary.

In education major starts on site will drive growth as #universities seek investment to improve their offering. Secondary school builds to accommodate rising student numbers will also see growth across the UK’s major urban centres, with major centres Manchester and Glasgow key to this.

Changing societal attitudes to retail are expected to create growth opportunity outside of London and the South East as warehousing and logistics premises are sought. Growth in this area is expected to offset a weakening in traditional manufacturing investment in factory space.

Investor confidence has recovered post EU Referendum and the demand appears to be driven by structural change in the retail sector.

As a result, the North West could be in line for a 15% increase in warehousing and logistics project starts during 2018. With key road links this area viewed as essential in offering good transport connections to the UK’s major industrial hubs.

In sharp relief to an overall picture of contraction in the private housing market, Manchester is witnessing growth in the #BuildtoRent market. Alongside London and Birmingham, Manchester was the preferred location for major schemes starting this year and in 2017.

Last year saw £700m worth of build to rent projects start and during the first five months of 2018 a further £324m was invested. A total of 6,600 units were started prompting construction market analysts Glenigan to predict further strong growth.

Regional centres such as Manchester and Glasgow rather than London have also seen an increased demand for more high quality #officespace. Rising demand and previous lack of development opportunity has, according to Glenigan, tightened the supply of available office space.

The North West is expected to outperform London during 2019 as a growing development pipeline continues to give longevity to improved fortunes.

Glenigan states in its mid-term Construction Outlook: “While overall starts will decline this year, growth is forecast in the education, health and civil engineering sectors. Growth will also be focused outside London and the south east with project starts in the Midlands and the North of England being the strongest performing regions.”

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