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News archive - November 2014
Fears for future of healthcare construction
Fears are growing for the future of the healthcare construction industry as experts warn that a downturn in activity has seen the market ‘grind to a halt’ over the summer months.
Despite work within the health and social care sector remaining relatively buoyant during the recession, the outlook for the next year looks less prosperous.
This is backed up by two reports which show a steep downturn in planned activity within the industry.
Barbour ABI’s latest Economic & Construction Market Review1 shows that levels of activity in the sector decreased by 1.6% in August 2014 compared to the previous month. In the three months to August the value of contracts decreased by 11.1% on the previous three months, and was down 28.9% on the same period in 2013.
A bleak outlook
The report states: “The values of medical and health contracts decreased in August month-on-month and are lower than those recorded last year, so longer-term patterns point to a fall in activity.”
Glenigan figures tell a similar story. Its Construction Market Review and Forecast2 for September states: “Healthcare construction growth ground to a halt this summer.
“Glenigan’s research shows that, in the year to August 2014, the underlying value of project starts was completely static on a year ago.
“In all the other nine construction sectors tracked by Glenigan on an annual basis, there was an increase. Only in health was there no growth.”
Overall new work in the year to the second quarter of 2014 was down 19.2% on its pre-downturn peak in quarter one of 2008, the report reveals.
Geographically, the North West is the main source of healthcare construction activity, providing 30% of all new work. This is mainly due to the awarding of the £18m contract for the Liverpool Life Science Accelerator at the Royal Liverpool Hospital. The West Midlands has 15% of the work, and the East Midlands boasted 14% of all recent activity.
Most of the work, according to the Barbour ABI figures, is within the public acute hospitals sector (50%), followed by primary care surgeries, health and medical centres (28%) and hospice, nursing and psychiatric homes (10%).
The ABI report also hints to a downturn in future activity, concluding: “In the three months to August the value of contracts decreased by 11.1% on the previous three months, and was 28.9% down on the same period in 2013, indicating the longer-term decline in the value of contracts awarded in the sector.”
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