South American Real Estate News

Offices, energy and housing are the growth areas

Post available in: English

Grand Prior / Mon 4th july / 7:23

Offices building in London, energy projects and private housing are the only bright spots in a gloomy forecast from the Construction Products Association today predicting another two years of declining workloads.

The association said output this year will fall by 0.5% followed by a greater drop of 2.8% in 2012 as public investment dries-up.

Growth will return in 2013 with a small 0.2% rise across construction before jumping 3.4% in 2014.

The predictions are a downgrading of the association’s last set of numbers in May showing greater falls in workload but a faster rise in output is now expected when the recovery gains momentum.

Public housing orders are expected to fall by 39% in the next three years, while road construction is set to halve.

But greater opportunities will exist in other sectors with a 50% rise in office building over five years, centred on London, and a three-fold increase in construction for the energy industry by 2015.

Output in the private housing sector is forecast to rise by 62% by 2013 but is likely to remain below pre-recession levels by 2015.

Noble Francis, economics director of the Construction Products Association, said: ”The industry is quite volatile at the moment, with some sectors enjoying increased activity, albeit from a very low base.  However, despite some positive signs, the overall prospects for the next few years are very poor.

“On a positive note private housing is expected to grow 62% over the forecast period. However, until 2013, we will still be building less than half homes needed to meet the number of new households created each year.

“These levels of house building will exacerbate the existing difference between supply and demand, leading to an additional housing gap of more than 600,000 homes in just five years.

“The government has indentified construction as a key driver to help boost economic recovery and for private sector work to replace public sector.

“Unfortunately, although the public work is now beginning to decline and will fall by 24 per cent by 2014, there is little evidence that the private sector work will replace this over the next couple of years.

“It is vital that government fully grasps the implications of these forecasts.  If it wants private construction activity to play a significant part in the recovery, then it must do more to help stimulate the industry, such as accelerating changes to the planning system, improving bank lending, reducing regulatory burdens and increasing the likely success of the Green Deal proposal, for instance by reducing VAT on Green Deal activity in line with the VAT charged on energy consumption.

“It would also help if the government actually spent on construction what it proposes.”

Source: Construction Enquirer

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