Glenigan Market Index May 2012

Gleniganindex
May 2012
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First decline in starts in 2012
•
Privatehousingcontinuestorecover
T
he Glenigan Index for
April fell by 4%, the first
decline this year. Over
the three months to April,
there was an increase in office, retail and industrial building compared to a year ago.
The underlying value of commercial starts rose from a low
base, after similar improvements to the number of planning approvals and contract
awards recorded over the last
few months.
over the three months to April.
Growth has slowed since the
turn of the year. Again, much
of the house building so far
this year has been focussed
in London and the South of
England. However, it’s clear
that other parts of the UK are
now also seeing an increase
in house building.
The Civil Engineering Index
for April was 14% down on
a year ago. Over the three
months to April there were
fewer utilities worth less than
£100m projects that a year
ago, when the sector was seeing strong growth. There were
Nationally, the provisional figures show that the underlying value of private housing
starts has increased by 15%
Poorperformancesfrompubliclyfundedsectors
two major (+£100m) utilities
projects which started in April,
both involved the upgrading
of the electricity transmission
network.
GLENIGAN INDEX
110
100
Index (2006=100)
•
90
80
70
60
50
40
A
M
J
J
A
S
O
D
N
F
J
2011
M
A
2012
OUTLOOK
Government cuts remain a drag on
industry output
T
he cuts in government
spending will continue
to restrict the number of
health, education and social housing projects coming through the development pipeline. Less money
for new builds could see an
increase in refurbishment
work this year - a trend we
have seen over the first
have seen over the first
quarter with social housing.
Conversely, the Department for Transport’s budget
was saved from the larger
scale cuts imposed upon
other departments; as such
the flow of infrastructure
projects is expected to remain steady.
Change on previous year
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
J
F
M
A
M
J
2012
J
A
S
O
N
D
J
F
M
A
M
J
J
2013
A
S
O
N
D
More growth is predicted for
commercial sectors, though
the strength of any sustained recovery depends
on economic prospects,
both in the UK and abroad.
In addition, any growth will
come off a low base, meaning it may not be enough to
counteract severe decline
from publicly funded work.
Scotland -9%
Three months to April
- Change on a year ago
North
East
North
West
Northern
Ireland -44%
East
Midlands
Wales
South West
+21%
+10%
West
Midlands
+38%
The increase in private
housing building seen over
the first third of the year
will slow over the next six
months. We do expect this
year to be a growth year,
though poor household
earnings growth and potentially flat house prices
will hamper the pace of any
rebound in the underlying
value of starts.
-4%
+11% Yorkshire
-30%
+23%
East of
England
-30%
London -9%
South East
-5%
Regional overview
Yorkshire & the Humber and the East of
England both declined by 30% over the three
months to April. The two regions particularly
suffered from the lack of health project starts.
By contrast, Wales, the West Midlands and the
South West of England saw the largest growth
in starts over the last three months. Wales
enjoyed an increase in civil engineering work,
while education and private housing provided
ore new work. Similarly, the West Midlands and
South West enjoyed the benefits of increased
private housing activity.
For more insight go to
www.glenigan.com/analysis
WWW.GLENIGAN.COM/REGIONS
The Regional Picture
EAST OF ENGLAND
EAST-MIDLANDS
-4%
Over the three months to April the value
of new work increased by 10% in the
East Midlands. Though there was a
particular lack of social housing and
health building, there was a strong flow
of education projects and private housing
schemes.
-4%
NORTH-EAST
LONDON
2%
A rise in the value of office and retail
work was not enough to ensure overall
growth in project starts in the Capital.
London saw a 9% increase in the value
of starts over the three months to April
after a drop in education and utilities
work.
-5%
0%
-28%
The underlying value of schemes starting
on site suffered over the three months to
April 2012 from a lack of hotel & leisure,
retail and office starts countering growth
in the underlying value of education
construction and private house building.
31%
The South West saw a 21% increase in
new work over the three months to April
compared to a year ago. The region
particularly benefitted from an increase in
private housing, health and infrastructure
starts over the period.
27%
The underlying value of education and
health starts fell over the three months to
April. However, thanks to an increase in
residential and retail projects, overall the
underlying value of starts rose by 23% on
a year ago.
The underlying value of project starts
in Wales rose by 38% over the three
months to April compared to the same
period a year ago. An increase in civil
engineering and private housing projects
boosted the comparison to the three
months to April 2011.
YORKS & HUMBER
WEST MIDLANDS
20%
The South East enjoyed a rise in
industrial and office construction over
the three months to April. However, there
was a 5% decrease in project starts
compared to a year ago after a dearth
of retail and education work.
WALES
SOUTH-WEST
41%
Northern Ireland is suffering from a
significant lack of investment from the
private sector and dealing with the strain
of reduced government investment. Over
the three months to April the underlying
value of start on sites fell by 44% on a
year ago.
SOUTH-EAST
SCOTLAND
-7%
The underlying value of project starts
fell by 4% over the three months to April
compared with a year ago, after a drop
in social housing and civil engineering
projects. This was contrasted by a slight
rise in private housing and retail work.
NORTHERN IRELAND
NORTH-WEST
Though there was a lack of new community & amenity and education projects
starting on site over the three months
to April, the underlying value of project
starts actually rose by 11% compared to
a year ago after an increase in private
housing and retail schemes.
The underlying value of projects starts
over the three months to April dropped by
30% after a poor flow of civil engineering,
health and residential projects starting on
site. We expect this negative to continue,
albeit at a slower pace.
-7%
Project starts fell in Yorkshire & the
Humber over the three months to April
by 30% compared to the same period a
year ago. Though there was an increase
in residential and industrial work, the lack
of education and health projects weighed
on construction.
Percentages in Charts compare 12 months to April 2012 to previous 12 months
Reducerisk-Savetime-Makeconfidentdecisions-Identifyopportunities
WWW.GLENIGAN.COM/SECTORS
Sector Performance
+25%
-23%
-7%
+25%
+41%
CIVIL ENGINEERING
COMMUNITY & AMENITY
The underlying value (excluding projects
worth over £100m) of project starts over
the three months to April was down by
14% on a year ago. There were,
however, a number of major projects
commencing over the last three months.
The underlying value of project starts
dropped by 1% over the three months to
April compared to a year ago. Previous
increases in the value of planning
approvals have tailed off, and we are
expecting the value of construction starts
to continue to decline over 2012.
+8%
EDUCATION
HEALTH
The underlying value of education starts
continue to drop off, falling by 38% over
the three months to April compared with
the same period a year ago. It is expected
that the sector will have to endure a
shrinking pool of available work through
the rest of years.
As with other sectors which rely on public
funding, cuts to government investment
have is expected to reduce the level of
building over 2012. The underlying value
of starts over the three months to April
was 5% lower than a year earlier, and
this negative trend will continue.
-3%
HOTEL & LEISURE
INDUSTRIAL
The underlying value of hotel and leisure
project starts increased by 1% over the
three months to April compared to the
same period of 2011. A year ago, the
major investment into the sector in
preparation for the London Olympics
was beginning to tail off, a trend which
continued over the rest of the year.
The underlying value of construction
starts increased 25% over the three
months to April compared to the same
period a year ago. This came after a
large increase in detailed planning
approvals over the last twelve months,
and the positive trend in activity is
expected to continue.
+25%
OFFICES & COMMERCIAL
PRIVATE HOUSING
Office starts continued to rise over the
three months to April, extending the
positive trend seen since the second half
of 2011. A 65% increase over the three
months to April should see be followed by
further growth through the summer.
The underlying value of private housing
starts has increased by 15% over the
three months to April. Though growth in
project starts has slowed since the turn
of the year, an upturn in the value of
detailed planning approvals over the first
quarter of 2012 has bolstered hopes of a
continued recovery.
+16%
RETAIL
SOCIAL HOUSING
High inflation and low earnings growth
are affecting consumer confidence,
with many retailers suffering from falling
sales. Despite this, supermarkets are still
showing an appetite for investment in
new premises, and the underlying value
of project starts over the three months to
April increased 37% compared to a year
ago.
The underlying value of social housing
project starts fell by 17% over the three
months to April on a year ago. Cuts
to government spending have greatly
reduced the flow of projects coming
through the planning pipeline, and this
has weighed on the level of sector
activity.
-1%
Percentages in Charts compare 12 months to April 2012 to previous 12 months
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