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Project starts to see strong rise in 2025, says market expert

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Project starts are expected to see a stronger rise in 2025 as economic growth accelerates, with health and private housing as key drivers of growth.

Credit: Ricardo Gomez Angel / Unsplash

The latest Construction Industry Forecast by Glenigan detailed the outlook for the next three years.

The report claims the election result will reduce political uncertainty, and a strengthening economy is expected to boost consumer and business confidence.

Here’s how the report breaks down the sectors that are expected to be key drivers of growth: 

Health

Public sector projects are expected to be a key driver of growth, with a focus on health projects, despite predicted moderate project starts in 2025.

The report cites Labour prioritising NHS investment as a good sign for the medium term outlook for new construction work in the sector.

Glenigan acknowledges slower than hoped progress on the New Hospitals Programme, however, it argues investment involved in new construction remains large and much of the work has yet to begin,.

The forecast predicts that the value of underlying health starts will rise by 14 per cent this year.

A recent National Audit Office report anticipates the delivery of 32 new hospitals by 2030 with a further eight set to be completed beyond then.

Private housing

The sector is predicted to see gradual recovery from mid-2024 with 2 per cent growth, up to 14 per cent in 2025 and a further 6 per cent in 2026 as affordability improves and economic prospects brighten. 

Private housing starts are expected to grow moderately amid increasing house sales.

The forecast also predicts housing starts will accelerate next year in response to improved market conditions.

Meanwhile, as social housing is expected to experience a period of modest growth over the next three years, due to stabilising construction costs and increased government funding, a weakening in student accommodation starts will slow down sector recovery. 

Retail & Hotel & Leisure

While pre-pandemic levels are unlikely to be reached by 2026 for retail, gradual recovery in project starts is expected over the next three years.

The forecast suggests supermarket development is expected to perform strongly.

Hotels suffered in previous years but rising disposable incomes and tourism could fuel investment and propelling project starts over the next three years.

Offices

Despite continued hybrid working, the forecast predicts office project starts rebounded slightly in the first quarter of 2024 following a period of weak economic growth and high interest rates.

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