Regional cities see drop in new construction work

The number of construction projects breaking ground across four major regional UK cities fell by more than a third last year, according to research.

Data published by professional services firm Deloitte showed that 47 schemes got underway in Manchester, Leeds, Birmingham and Belfast in 2024.

This was down from 64 the year before and 74 in 2022, as investors reacted cautiously to uncertainty in the domestic and global economic and political environment.

All of the cities bar Birmingham reported falling activity for the second year in a row.

This was not the first slump in regional activity in recent years, though. A Deloitte spokesperson noted that a previous downward trend began in 2019. “The total number of schemes [in the four cities] fell from 96 in 2018 to 56 in 2019, then to 55 in 2020 [before recovering to 72 in 2021],” they said.

Of the 47 new starts recorded last year, 22 were residential, with a further nine classed as student housing and three as hotels.

Eleven office projects got underway, said Deloitte, with a number of them refurbishments.

The other two schemes combined multiple categories in a single development, such as hotel and student accommodation or offices and retail.

John Cooper, infrastructure and real estate partner at Deloitte, said: “Our latest regional crane surveys underlined that while levels of residential, office and student schemes under construction remain healthy, there has been a clear reduction in the number of new schemes breaking ground.

“This reflects the challenging economic and geopolitical backdrop that is impacting investment and a willingness for the construction sector to take on risk.”

The overall volume of homes under construction in the four cities dropped 7 per cent to 23,673 in 2024, while the amount of office space being built dipped by 17 per cent to 260,000 square metres.

However, there was a modest 2 per cent uptick in the number of student bed spaces under delivery.

There were five new starts in Belfast last year, two fewer than in 2023. The volume of office space under construction in the city was up by a fifth to 13,400 square metres. One hotel scheme started on site and Deloitte reported over 2,000 further rooms in the planning pipeline.

A four-year low of 11 construction starts were registered in central Birmingham last year. The survey said 2,242 student accommodation bedspaces were being built in the city, along with 75,000 square metres of office space.

Leeds also saw 11 schemes start on site, the lowest since 2013. Eight of these were residential or student housing, two were offices and one was a hotel. The Yorkshire city had 24 sites under construction, with 19 completions recorded in 2024.

Manchester continued to lead the way with 20 construction starts in 2024. However, this represented a third year of decreasing activity and the lowest point since 2014. Eleven of the new projects were residential, six were in the office sector, there was one student housing scheme and one hotel.

Cooper said: “We expect a recalibration in the year ahead as developers and construction companies weather the economic fluctuations and adapt to the shifting landscapes around them. There remains a healthy construction pipeline across the four cities, with ongoing dynamism in the residential sector, while appetite for student housing is enduring.

“The challenge for developers and investors, as well as local authorities, is to continue to facilitate schemes that will enable growth in these cities, creating liveable, well-connected and thriving environments. However, while costs to build and get schemes moving are prohibitive, we would not expect levels of new developments to immediately rebound.”