RLB upbeat for North East as build starts climb
Rider Levett Bucknall’s latest Construction Market Intelligence report shows projects starting on site increasing in the fourth quarter of 2023, improving the region’s outlook.
In the CMI report for Q1 24, RLB reports a positive outlook in the North East, despite the challenging economic backdrop.
There was an increase in construction starts in Q4 2023 of 11% over the previous quarter, and 14% compared to Q4 2022. Contractors are keen to fill gaps in their order books, RLB said.
Lucy Fisher, senior associate and lead for RLB in the North East, said: “Across the North East, our latest research shows we are starting to see a promising perspective emerging – even in the face of a challenging economic environment that has impeded market dynamics for the past year.
“Beyond 12 months, we anticipate ongoing stability in tender price levels for bids, with continued shifting of demand across sectors and the settling effect of more stable material prices.
“The impact of an upcoming UK general election and interest rate decisions could act as a significant catalyst for improvements in the long-term outlook. “
Tender prices and input costs
- Long-term stability in pricing levels is anticipated
- In the region, RLB has seen a steady increase in construction inflation to more typical levels, with demand-led inflationary pressure being offset somewhat by reductions in materials prices overall.
- Beyond 12 months, the firm anticipates ongoing stability in tender price levels, with continued shifting of demand across sectors and the settling effect of more stable material prices.
- Increasing demand in the digital and technology sectors is driving wage inflation among specialist construction teams.
Sector focus
- Devolution plans for the North East, that see the region gain new political powers and £4.2bn in investment, will provide significant funding for transport, education and skills, housing and regeneration, and support new commercial and tech-based development.
- There is much optimism in the region’s education sector, particularly in higher education, with investment in research facilities being seen as key to future growth opportunities and funding streams. Examples of new projects include the £50m world-leading space skills, research and technology centre at Northumbria University.
- Net Zero Teesside Power, the world’s first commercial scale gas-fired power station with carbon capture, is now under construction and will position the region as a leader in green technology.
- The significant cost pressures and interest rate hikes which impacted the residential sector in 2023 are likely to continue in 2024. Much lower rental levels in the North East compared to the rest of the UK, will have a lasting effect on the region for the short-to-medium term.
The report can be viewed in full here.
