Glenigan’s 2021-2023 Construction Industry Forecast shows activity has rallied and has been on an upward trajectory since the start of the year
This week, Glenigan, construction industry insight and intelligence experts, releases the widely-anticipated Construction Industry Forecast 2021-2023, which reveals a positive outlook for the healthcare sector, driven by NHS capital funding.
Its central predication is that, across all sectors, construction output will return to pre-COVID levels by 2022, with underlying starts 3% above 2019 levels.
The forecast provides a comprehensive overview of where the construction industry is in the here-and-now, combined with considered and fact-based forecasts of how it will perform over the next two years.
An industry ascending
Although COVID-19 had a significant impact on the UK construction sector, evidenced by a significant dip in output during 2020; the first half of 2021 has seen a gradual rise towards pre-pandemic levels.
Significantly, the value of underlying project starts during the three months to May 2021 rose by 20%, and was 70% higher than when the UK was in the midst of the first national lockdown a year ago.
After this sharp initial upturn, a steadier progressive strengthening in project starts is anticipated over the forecast period.
However, the recovery will not be evenly spread, with some regions and sectors performing better than others, reflecting a changing UK economic and social landscape.
There are definitely reasons to be cheerful and the forecast provides a good indication that the construction industry is returning to pre-COVID levels of activity
The outlook for the health sector, however, remains positive.
The Nightingale hospitals programme lifted project starts in 2020, and increased NHS capital funding is set to lift project starts further over the forecast period.
And the NHS continues to be extremely high on the political agenda. However, while an increase in capital investment in NHS facilities can deliver efficiency improvements and better health outcomes; it will take time to bring forward new projects.
In the short term, frontline services are likely to take priority, the report states.
Overall, the value of detailed planning approvals for the health sector fell 7% in 2018, but has strengthened since then, with approvals increasing 3% in 2019 and 26% in 2020.
The value of project consents during 2021 to May remained high and was unchanged on the previous year.
Looking ahead, additional government funding will begin to feed through to sector activity from 2022.
Starts are forecast to remain unchanged this year after the strong performance in 2020, before rising by 14% in 2022 and 6% in 2023 as new projects come forward and as NHS trusts develop and implement their investment programmes.
Contractors working in the healthcare sector will need to be agile in a post-COVID landscape, evolving with emerging opportunities, particularly the planned delivery of 40 ‘new’ hospitals over the next decade
Commenting on the forecast, Glenigan economic director, Allan Wilen, said: “There are definitely reasons to be cheerful and the forecast provides a good indication that the construction industry is returning to pre-COVID levels of activity.
“However, the sector faces a number of challenges ahead, particularly, the current shortage of construction materials highlights the potential impact of supply-side constraints on the pace of the recovery over the next two years.”
And he concludes, “Contractors working in the healthcare sector will need to be agile in a post-COVID landscape, evolving with emerging opportunities, particularly the planned delivery of 40 ‘new’ hospitals over the next decade.
“They will also need to mitigate a number of external risks and reinforce supply chains, as well as adapting to digital transformation and a more-sustainable approach to building.
“Indicators suggest we’re now entering a highly-competitive era in construction, but equally, an exciting one.”
