COVID-19 Construction Update 19th June 2020
19th June 2020
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This week we’ve seen a further increase in projects confirmed open or restarting and a fall in delayed projects. The gains have been mainly shared by the Residential and Commercial sectors. There has been an increase in open and restarted residential projects in Scotland. We expect this to increase and spread to more sectors over the next few weeks.
We are hopeful that the planning system may be showing tentative signs of recovery, as indicators have started to strengthen slightly. However, decision updates and new contracts remain significantly below pre-crisis levels.
Our research findings this week have collected concerns over the lack of new projects, difficulties progressing planning applications, project delays, and attempts by main contractors to renegotiate contracts down with sub-contractors.
After the excitement of last week’s April GDP announcement, over the last few days some initial economic data for May has been published. The ONS’ labour market publication for May showed a relatively stable unemployment rate. It provided further evidence that the government’s support schemes avoided widespread redundancies over the lockdown. However, most of the other indicators suggest the labour market has weakened significantly.
The Bank of England announced further quantitative easing measures as it seeks to maintain market liquidity needed to ensure bond rates remain low, financing the increases to government debt. This indicates that central banks believe the crisis still has a long way to run as we move out of lockdown.
We continue to confirm that most contacts we speak to confirm that all their sites are back up and running. Through our research we continue to receive reports on:
Over the course of the week we’ve seen another large increase in projects confirmed open or restarting. The value and number of open projects across the UK have both increased. The gains have been mainly shared by the Residential and Commercial sectors, with the Industrial and Education sectors showing smaller increases. While the residential changes have been shared throughout the UK, changes in the Commercial sector have almost entirely occurred in London.
We have started to see an increase in open and restarted residential projects in Scotland. The value of delayed projects has reduced, with the Commercial, Residential and Infrastructure sector having the most remaining delays relative to their sizes.
In some positive news, both new applications and decision updates have started to strengthen over the last fortnight, however, it is too early to say whether it is a trend. Tenders continue to strengthen slowly, although they remain below pre-crisis levels. Contract awards are also on a very slow upward path. We are hopeful that this is the start of a pick-up in planning activity. Again, it is undoubtedly too early yet to be considered a trend.
We have seen a further increase in confirmed open projects this week. The changes this week have been shared mainly between the Residential and Commercial sectors. The Industrial and Education sectors have also seen some not-insignificant increases.
In the Residential sector the changes have been spread across the UK. Scotland has started to see some openings and we expect this to continue over the coming weeks as more housebuilders return to site. Changes in the Commercial sector have been mostly focused in London.
The most confirmed open projects (relative to the sector size) continue to be in the Medical sector, followed by the Residential sector. The Industrial sector continues to have the smallest level of open projects, followed by the Hotel and Leisure sector. Across the UK, London remains the highest number of open projects by a significant margin.
We have seen a further large increase of restarted projects this week. The Residential sector has seen the most returns shared across the UK. The next largest increase is in the Commercial Sector almost entirely in London. Other sectors have seen little change.
The Residential sector continues to have the greatest amount of projects returning to site by a distance, both by absolute value and relative size. The Industrial sector remains the sector with least restarted projects relative to its size, though it does have the lowest amount of delays. London has the highest level of restarted projects by a long way, followed by Scotland and the North East of England.
We have updated many smaller projects this week, so the number of projects delayed have decreased significantly. As in previous weeks, the Residential sector has seen the largest fall in delays spread across the UK. The falls in the Commercial sector have occurred almost entirely in London.
Scotland remains the outlier in terms of remaining delays. All other regions are now broadly similar in terms of remaining delays. The Residential, Commercial and Infrastructure sectors have the most remaining delays relative to their sizes. The Medical and Industrial sectors remain the least impacted by the delays.
We will continue to provide weekly updates, including themes we uncover as further information becomes available. For a more detailed review of the construction projects affected by COVID-19, please click here and get in touch.