Commenting on this month’s figures, Allan Wilén, Glenigan’s Economics Director, said: “The three month period covered by the August Glenigan Index straddles the EU referendum vote. The 7% decline in project starts reflects in part the impact of the related political and economic uncertainty on investor nerves.
“Non-residential project starts were particularly weak, due to fewer office, hotel & leisure and industrial projects commencing on site. This, combined with a fall in civil engineering project contributed to the overall decline in the index against both the preceding three months and a year ago.
“Residential project starts were 3% ahead of a year ago, despite a 15% decline against three months to May. Private residential starts were unchanged on a year ago, while social housing starts were 10% higher.
The value of projects securing detailed planning approval during the first eight months of 2016 is 3% up on a year ago. However the strongest growth in approvals has been in those sectors where project starts have been most affected by referendum uncertainty; private housing, industrial and commercial developments.
Investors will be closely watching the unfolding economic environment over the coming months to assess any implications for planned projects. This is likely to disrupt the progress of some projects to work on site and accordingly we expect an overall weakening in project starts during the second half of 2016."
Regionally the value of project starts were generally down on a year ago. However the South East and South West of England and Wales bucked the trend, with underlying starts up against a year ago. Starts were also sharply higher in Northern Ireland.
Key findings include:
- Starts in the three months to August were 7% lower than a year ago and 21% down on the previous three months.
- Residential starts were 3% up on a year ago, despite being 15% down on the preceding three months.
- Non-residential project starts were 13% down on a year ago and 24% lower than during the March to May 2016. Office project starts were half the level seen in the preceding three months and were 43% down on a year ago.
- Public sector non-residential areas were also down on the same three months a year ago, when project starts were recovering from the pre-General Election hiatus.
- Civil engineering projects starts dampened overall starts, being 34% down on a year ago
Source: Specification Online