2015 wasn’t a banner year for UK construction companies. Many firms suffered losses by having to uphold legacy contracts that were signed for too little money during the depths of recession, simply to maintain volumes.
However, Richard Threlfall, Head of Infrastructure, Building and Construction for accounting giant KPMG, predicted a far better outlook for the industry over the next year, back in December 2015, saying, “…it seems unlikely now that there are many more skeletons in the cupboard and as restructurings of businesses in the sector work through, a degree of stability should return.”
Having also made the bold statement that, “2016 will be a good year for the construction industry… labour supply and price pressures will start to ease, and the industry should be able to start focussing on securing steady growth in what will be a strong market. It will be a year for businesses to invest, in people, processes and technology, to create a platform for what could be many good years ahead.”
So, how does his forecast bear up? Well, Balfour Beatty, which had to weather pre-tax losses of £199 million in 2015 largely due to the aforementioned legacy contracts, has managed to deliver a £14 million operating profit for the first time in years, so far, and reports that its volume of legacy commitments to be completed has dropped by 60%. Chief Executive Leo Quinn predicts that they will have over 90% completed by the end of 2016.
Capitalising on this potential upswing in the UK construction industry, Birmingham City Council is looking to attract investment in a proposed £500 million plan to redevelop Smithfield over the next ten years. £40 million has already been committed to the project, which will involve transforming fourteen hectares of prime city centre land into more than 3 million square feet of commercial space, 2000 new homes, along with new squares, parks, gardens, indoor markets and pedestrian boulevards. At the heart of the development will be Festival Square, that will include new cultural buildings, restaurants and leisure space.
Still in Birmingham’s city centre Enterprise Zone, work has begun on 2 Arena Central, a £66 million, 210,000 square foot office building for HSBC, and plans were just unveiled to develop 3 Arena Central. These plans include 180,000 square feet of commercial space over nine floors, 66 basement car parking spaces and 40 secure cycle points.
Meanwhile, Haringey Council is taking bids for a £2 billion redevelopment of its borough, forecast to eventually deliver around 5000 new homes and a new town centre over the next 15-20 years. The bids currently being considered are for the first phase of development, which will focus on Wood Green and Tottenham.
And these are merely projects that have been announced over the last day or two. Therefore, to answer the question above: Affirmative, the UK construction industry seems to be having an awesome year, so far, and the good news is it looks set to continue.