Construction ‘remarkably resilient’ in major UK cities

Construction activity remained buoyant in 2022 in four of the UK’s major cities outside London, according to new research by Deloitte.

The company’s latest regional crane survey found 74 new project starts in 2022 across the central areas of Belfast, Manchester, Leeds and Birmingham, compared with 72 the previous year.

Almost half of these were residential developments (37), one less than in 2021.

The number of new projects starting was either sustained or increased across education, student housing and hotels, retail and leisure. But there was a drop in the number of office projects, from 15 to 11.

There was also an increase in the volume of space under construction for several key property types. The largest of these was for student housing, which rose by more than a third to 5,868 bed spaces under construction. This included an increase of 23 per cent in Belfast and 59 per cent in Leeds.

Deloitte said that the construction of new university buildings and student accommodation were the “key drivers of development activity” in the Northern Irish capital. The additional 1,850 student bed spaces under construction there last year included two new schemes of more than 400 spaces.

Meanwhile in Leeds, seven new starts brought the total of student accommodation schemes under construction to a record-breaking 11, which are set to deliver 3,294 student bed spaces.

In contrast, student housing under construction fell by 68 per cent in Birmingham. But the volume of space being built in the city increased substantially for offices, residential and hotels. The city had a total of 43 schemes underway in 2022, compared with 34 the previous year.

Across the four cities, the volume of office space under construction was around 3.66 million square feet (340,000 square metres). Despite being 5 per cent higher than in 2021, this was still down on the five-year average of 4.34 million square feet (403,000 square metres).

John Cooper, partner in real assets advisory at Deloitte, said some office schemes were returning to the planning stage in response to occupiers’ changing demands, with expectations including flexibility, high-quality amenities and sustainability and wellbeing measures.

Commenting on the overall results, Cooper said: “Despite many market uncertainties over the last few years, construction in our surveyed UK regional cities remained remarkably resilient.

“The residential sector is showing no signs of slowdown, with large numbers of homes still in the development pipelines across the cities.

“But it is the education sector that stands tall in construction activity as universities are the catalyst for growth and are creating a sense of space, and therefore a platform to invest. Developers are reacting by building significant numbers of student bed spaces, demonstrating the cities’ commitment to not only student attraction but graduate retention.”