RLB said new starts have declined in 2023. Credit: RLB

Market hopeful in face of gloomy data, says RLB

21 November 2023 15:33 Neil Tague Comments (0)

The latest construction market intelligence report from the consultancy shows business activity in the North East falling to record the lowest score in the UK.

Rider Levett Bucknall’s CMI report for Q4 2023 highlights how high interest rates and inflation have impacted the North East.

This year the region has recorded the UK’s largest increase in unemployment, in contrast to 2022 when it had its lowest-ever unemployment rate.

The North East PMI Business Activity Index has shown a steep decline, having fallen from 49.2 in August to 43.7 in September, the lowest score in the UK.

RLB said that new project starts are slowing in the region as the combined effects of inflation and interest rates continue to affect project viability, leading to projects being paused or having to be re-engineered.

The report also shows that demand for affordable housing is still strong, with increases in applications for social housing projects – however, the consultancy warns, the economic picture will need to improve if the industry is to provide sufficient new homes in the region.

Although there has been no significant rise in planning applications, major schemes are still being worked up and submitted for approval, which suggests that there is underlying confidence in the region, RLB said.

Sectors which have shown activity include the commercial office, public and civic, retail and logistics and manufacturing sectors.

RLB said that Teesside Freeport is “generating significant investment in the construction sector at present, with many spin-off developments directly resulting from this major new opportunity”.

Percentage tender price growth forecast, RLB Newcastle

2023: 3%
2024: 4%
2025: 4.5%
2026: 4%

Lucy Fisher, senior associate at RLB North East, said: “Our latest Construction Market Intelligence indicates that despite gloomy economic data in the North East and a challenging backdrop nationally, we are seeing that the market is retaining some confidence.

“For example, Teesside, with its road links and Freeport, is increasing the area’s attraction for distribution hubs due to labour availability, government incentives and competitive rents compared to other regions.”

The full RLB report is now available online.