Construction 2015: The winners, the losers and what to expect
Although the sector is operating at its strongest since the recession, cracks are beginning to show in parts of the system, whilst others are thriving.
With a period of change and uncertainty inevitable over the coming months, 2015 looks to be a pivotal year for many parts of the industry.
But who is set to come out on top and what should we expect to see throughout the year?
The real winners, as in 2014, are anticipated to be housebuilders, as the latest figures showing a ten per cent rise in the number of new homes being built last year prove.
The sector has been able to and will continue to effectively capitalise on the growing demand in the market and rising sales.
“The real winners, as in 2014, are anticipated to be housebuilders”
May’s general election is set to further rally up public interest in the housing issue, with political party manifestos predicted to include incentives to stimulate country-wide housebuilding, resulting in a positive outlook for UK housebuilders.
Specialist contractors and service trades are also tipped to have a strong year, with escalating demand outstripping supply.
Many trades will be able to demand both the increased pay and conditions they desire as housebuilding continues to benefit the whole supply chain ensuring specialist contractors stay in business this year.
Further factors also likely to impact the sector include the expansion of European Quantitative Easing, along with reported warnings that hedge funds are issuing bets against property businesses.
Both will result in increased competition for skilled labour driving up costs across the UK construction industry; benefiting sub-contractors and specialist skilled workers, as they prosper from the demand for their services.
Sub-contractors are already awake to the benefits of the current market and have begun to leverage their strengthened relationships with clients, developed over the last year.
2014 saw a progressive trend towards the supply chain preferring to work directly with the client and cutting out the middle man – the main contractor.
This has proved advantageous for both contractor and client and will continue throughout 2015, creating a more efficient cash flow system, where sub-contracts are paid on time and more regularly.
And this leads us to the foreseen casualties of 2015.
“Contractors, who have struggled in the market in 2014, are the most likely losers”
Main contractors, who have struggled in the market in 2014, are the most likely losers.
Unless they are able to adapt to the changing conditions and external demands of the next year, many could be on their way out.
Prime commercial and residential developers could also be seeing a tough time ahead.
As the top end of the market slows in the lead up to the election, foreign investment into the sector stalls and the price and availability of specialist materials and workers becomes an increasing strain, they too could be looking at a period of uncertainty.
Yet the long-term vision for the sector is bright.
Investors still flock to invest in real estate markets that have proved stable throughout adversities and London retains a top spot, with the UK as a whole remaining an attractive option for the international community.
Whatever the outcome of this year’s election, government policies are certain to include measures to stimulate economic growth across the UK, and infrastructure construction will be needed to support this growth.
Keith Taylor is managing director for property development group, iWS Group
Overseas Investors Continue To Dominate Central London Market
According to international real estate advisor Savills, the City and West End investment markets continued to see an increased appetite from overseas purchasers during 2012 accounting for 76% and 67% of overall transactions respectively as London continues to retain a ‘safe haven’ status. This compares to circa 60% reported in 2011 for both markets.
Savills notes that the total transaction volume for the City market was £8.9 billion, while the West End saw £6.1 billion reported. Of the transactions conducted by overseas purchasers, it was the Asian investors that dominated in the City accounting for £2.27 billion of transactions. Savills advised buyers from Malaysia, Japan, Greater China and Korea including the purchases of Thames Court, Lower Thames Street for £165 million and 10 Queen Street Place also for £165 million.
European buyers took the lead in the West End accounting for £1.55 billion with Savills advising buyers from Italy, Spain, Germany and Sweden. Deals of particular note were 1 Southampton Row in Covent Garden for £110 million and Kings Place in King’s Cross for £235 million.
UK investors were also an active force in the Central London market during 2012, with Savills research showing them account for 24% (£2.17 billion) of market share in the City and 33% (£2,019 million) in the West End.
Savills research shows that this diversification in appetite is demonstrated by overseas investors generally conducting less deals in Central London with 64 and 79 concluded in the City and West End respectively, but accounting for a higher transaction volume than domestic purchasers who have transacted a higher level of deals at 88 in the City and 89 in the West End, but with a lower overall sales volume.
Original Source: http://www.iwsgroup.co.uk/news/overseas-investors-continue.html
Shortage of Building Maintenance Workers In Scotland
Mr John Fielding, principal of maintenance painting company Local Home Painters, reported to UK999 that there had been an upsurge in maintenance work being undertaken and it didn’t matter if it was Glasgow, Edinburgh or Aberdeen highly skilled tradesmen where in short supply.
Mr Fielding said, ” the issue is the lack of apprentices being trained over the last decade and this is now showing up in trades in most demand” He went on to say “the cost of building maintenance programmes has risen significantly in recent years as building owners have had to match higher wage demands for the skilled tradesmen they require to complete the various tasks.”
Shortages in skilled tradesmen are not confined to Scotland as we see in this video of the same issue in Canada.
UK999 was also made aware of the shortage of skilled trades people not only in the Northern Hemisphere but also Australia. A Governments report published in September 2014 noted that there was a shortage of skilled painters in New South Wales. This was not just the situation in New South Wales but also other states around Australia. They noted that 40% of all advertised vacancies were not filled.
Mr Jacob Smith, founder of Ace Roof Restoration Melbourne confirmed to UK999 that the shortage of skilled tradesmen in the painting industry was no different than in the Australian roofing trade.
Mr Smith said, “we have the ability to grow our business four fold interstate but is only constrained by our ability get qualified staff to complete the projects offered to us.” He noted that the roofing trade was one for a younger man and many older tradesmen quickly move on to other industries where the fitness and agility required for climbing around roof tops was no required. This put added pressure on companies to train roofing apprentices which has not been occurring.
The continuation of not training apprentices in all trades is going to force building and maintenance costs higher around the globe. The pool of skilled labour shrinks with natural attrition of older skilled workers retiring or leaving the roofing industry.
Mr Fielding said, “requests for painting Glasgow homes are going to more and more unskilled operators as the skilled resources are just not there and home owners have become desperate to get overdue maintenance work done.”
You can visit Local Home Painters website at: http://localhousepainters.net
Stop Press: New Interior Design News Website
Triple Nine has been advised that a new website is being developed with Interior Decorating news that will be shared on this site by them. More details to follow on this industry addition.