The upcoming UK general election could signal the end of political instability and return of investor confidence in new construction projects, according to the Glenigan Forecast.
While public sector projects are predicted to remain stagnant, private sector projects and civil engineering activity are set to continue growing.
Private housebuilding
Private housebuilding is set to be the most promising sector for new construction projects, following a hesitant recovery, with a predicted 14 per cent upturn in 2025.
If Labour form the next government, house building could see a boost in activity due to planning reforms and the reintroduction of mandatory housing targets for local authorities.
Across the country:
- The South East continues to see the largest share of planning approvals for new private housing developments (worth £7.5 billion last year).
- New starts in the East, North West and South West of England could see an increase due to an upturn in planning approvals this year for housing schemes.
Office space
Despite an overall drop in office space demand, demand for premium, energy efficient space and more refurbishment work could lead to a growth in new office project starts.
New energy efficiency regulations might also create more refurbishment and retrofit construction work in the sector.
A 12 per cent rise in new office project starts is forecast in 2025, following an eight per cent increase this year.
London, the South East and the Humber are predicted to see a strong pipeline of new projects in this sector.
Hotel sector
Hotel and leisure project starts are predicted to see a 14 per cent rise this year with a further six per cent rise in 2025, following a recovery in the hospitality sector and the prospect of stronger consumer spending.
Predicted value of Hotel & Leisure planning approvals this year:
- London: £1,600 million
- South East: £1,100 million
Industrial projects
Growth is expected in new industrial construction from next year due to stronger demand for warehouse and logistics space.
Overall industrial project starts are set to rise by 3 per cent in 2025, following a two-year decline.
The West Midlands, London and the South East are forecast to be the strongest areas for new work in the sector.
Retail sector
New construction for the retail sector could see an uptick over the coming years.
Shifting consumer habits have led to a rise in discount grocery chains, which may lead to the expansion of shops such as Lidl and Aldi.
New starts in the sector are predicted to rise by three per cent in 2025, with an increase to 19 per cent the following year.
The sector could also see more regeneration projects on old/empty shops through mixed-use schemes.
London, the North East and Scotland are expected to see the best growth.
Utilities
Greater utilities investment, especially in water, could sustain the current growth in civil engineering.
Utility project starts were up 13 per cent over the previous year, at the start of 2024.
Investment in renewable energy and work on landmark infrastructure projects such as HS2 is predicted to bolster the sector.
Public sector predictions:
- Six per cent rise in civil engineering starts this year, and an extra four per cent in 2026.
- Four per cent rise in health sector project starts for 2026.
- Six per cent rebound in education project starts in 2026.
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