LONDON: The most expensive construction location

  • The UK’s public sector spending spree is slowing down, taking pressure off an overheated construction sector.
  • Overall UK&I cities ranked highly; all sat within the top 25 in the world, except Belfast (28th)
  • Although levels of inflation were moderate in the UK, specification enhancements related to building safety, sustainability and client expectation pushed prices up further than most other locations.
  • Bristol entered the top 10 for the first time.

London has narrowly overtaken Geneva to top the rankings once again as the most expensive city in the world in which to build, according to the latest Arcadis 2024 International Construction Costs (ICC) report, released by the global design and engineering consultancy today.

According to the study of comparative construction costs across 100 global cities, enhanced specifications associated with safety and sustainability have been pushing prices upwards, causing London to overtake Geneva (2nd) in the rankings, closely followed by Zurich (3rd) and Munich (4th). Rising costs and double-digit price growth in Munich have propelled the Bavarian capital significantly up the rankings, this year surpassing major US cities like New York (5th) and San Francisco (6th) in terms of relative cost to build.

The 2024 Arcadis International Construction Costs Index covers 100 of the world’s large cities across six continents. The cost comparison was developed covering twenty different building types, including residential, commercial, and public sector developments, and is based on a survey of construction costs, a review of market conditions and the professional judgement of Arcadis’ global team of experts. The calculations are based in USD and indexed against the price range for each building type relative to Amsterdam.

2023 was a difficult year across the world, with high borrowing costs undercutting the positive impact of infrastructure investment in many countries. However, with markets stabilising and inflation beginning to ease, we are at a pivotal moment in the recovery of the global construction sector. Increasing demand for labor, materials, and power mean that productivity is now becoming an increasingly critical factor in investment decisions and project viability.

Arcadis notes in particular the rapid acceleration of investment into the advanced manufacturing and technology sector, including data centers, pharmaceutical facilities, gigafactories and wafer-fabs. The sheer scale and complexity of these end-date-critical projects inevitably results in more financial risk, meaning that clients need to evolve their design, procurement, and construction capabilities even as these multi-billion-dollar programs are being built.

On the whole, cities in the UK and Ireland (UK&I) ranked highly for construction costs. All sat within the top 25 most expensive construction locations in the world, except Belfast which ranked 28th. Although levels of inflation were moderate in the UK, specification enhancements related to building safety, sustainability and client expectation pushed prices up further than most other locations. Viability challenges have continued to affect projects, even as inflation has fallen.  New regulations focused on low carbon emissions and improved building safety also created uncertainty and added to project costs. Uncertainty could continue in 2024, given local, mayoral and national elections are due in the coming months.

Tight fiscal conditions will see increasing pressure on the public purse in 2024 and beyond, with real-terms cuts in government capital investment currently projected until 2029. Whilst optimism as measured by the construction PMI has improved, the legacy of a weak order book from 2023 will delay recovery until late 2024 before the positive sentiment is realised. The infrastructure sector looks set to offer the greatest future opportunity, particularly investment in networks including energy transition projects and a large-scale, £96 billion planned investment in the regulated water sector.  In both sectors, capacity constraints will contribute to higher inflation and may impact the ability to deliver all projects and programmes in the period.

Simon Rawlinson, Head of Research and Strategic Insight at Arcadis said:

“The UK’s reduced public sector spending has eased pressure on an overheated construction industry amid slow growth. With minimal GDP growth and high interest rates, the sector faces viability challenges due to regulatory and election uncertainties. As fiscal conditions tighten, private sector collaboration is crucial for investment and urban renewal. Despite challenges, infrastructure, particularly in energy transition and water projects, shows promise. The cancellation of later HS2 rail phases has led to transport spending disruptions and fund reallocation.”

Peter Hogg, UK Cities Director at Arcadis, added:

“London’s resurgence to the top spot in the ICC 100 index for 2024 reflects the capital’s resilience in the face of challenging conditions. Despite a 10% year-on-year decline in construction output and a significant 20% drop in housing, the Commercial sub-sector experienced a notable 24% rise, largely attributed to retrofit activity. However, the capital has faced declining orders for new work since 2022, exacerbated by high interest rates impacting scheme viability and regulatory changes causing design and planning delays and cost escalations.”

Source: Arcadis

 

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GEZE UK – a Living Wage company

GEZE UK is delighted to announce that the company has been accredited as a Living Wage Employer.

 

The real Living Wage is the only UK wage rate based on the cost of living. It is voluntarily paid by over 14,000 UK businesses who believe their staff deserve a wage which meets everyday needs.

To achieve the accreditation GEZE UK had to confirm that the company pays the real Living Wage to all directly employed staff and have a plan in place to pay all contractors a Living wage – both of which the company has done.

Paying the real Living Wage is not only a benefit to staff but to the company too – it improves the employer brand and boosts staff productivity and motivation at work. It also helps employers to remain competitive, retain existing staff and attract new staff.

 

Rachel Boxall, Finance Director of GEZE UK, said:

“We decided to go for the Living Wage accreditation as we think it is an excellent way to demonstrate our commitment to being a responsible employer. By paying the real Living Wage (as opposed to the national living wage set by Government) we are voluntarily taking a stand to ensure employees can earn a wage which is enough to live on.

There is also growing evidence of the business benefits of becoming a Living Wage employer. This is demonstrated by the number of well-known and diverse companies already accredited such as Liverpool FC, Aviva, Oxfam and Ikea.“

 

Andrew Gordon, Programme Officer, Living Wage Foundation added

“We are delighted to welcome GEZE UK as an accredited member of the foundation. Basic fairness is at the heart of what the Living Wage campaign is trying to achieve and why great businesses and organisations chose to go further than the government minimum.”

CLICK HERE for more information on the Living Wage Foundation

 

For more information on GEZE UK CLICK HERE to visit the website

 

OR CLICK HERE to email GEZE UK

 

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Maintaining u-value with SXP Single Ply Membrane Panel Fasteners

SFS Group Fastening Technology has launched an innovative new range of single ply membrane fasteners, in three sizes featuring a unique self-coring washer design, with a choice of two head drives and hardened drill points plus two types of slimline drive bar and other benefits; all aimed at giving the installer full confidence in securing the widely used, triple layer, insulated panels.   

 

SFS’s new SXP range is being introduced in three variants with the 25mm SXP2 intended to secure panel overlaps, while the 35mm SXP5’s proportionately longer point is for drilling into light-gauge steel, and the 47mm SXP14 delivers the greatest drilling capacity to tackle heavy gauge steel.

 

Produced in stainless steel with either Torx or Hex drive, all three have thread-free or free spin zones which prevent over-driving while also avoiding the fastener being loosened through vibration or thermal movement.  Crucially, the carefully engineered self-coring washer cuts a clear pathway through the insulation layer to avoid any unnecessary damage and help maintain the thermal integrity of the panel.

 

 

Product Manager Francesca McGibbon commented:

“Our new SXP range represents a significant advancement on our previous offering for securing single ply membrane panels with the SXP2 being the new variant: a clamping fastener or ‘stitcher’ for panel overlaps. Our range has been designed for optimised performance in their specific application, thus providing an effective solution for all your needs. Originally, the fasteners used a Torx drive, but we have now added a Hex drive so there’s more flexibility and, therefore, greater confidence for installers.  Then, because of the way that the SXP range is designed, it achieves a much cleaner entry through the membrane, thanks to the self-coring washer.  Essentially its ‘corkscrew’ motion achieves a clear passage and minimum disruption to the insulation, which helps maintain the U-value of the roof build up.”

 

 

Trialling of the product, which has been developed specifically for the UK market, has produced positive reactionsThe SXP range is further supported by having secured an EPD while the SXP5 and SXP14 carry FM approval.  SFS Group Fastening Technology can provide full specification and technical support for the new range as well as data sheets and other supporting literature while sample packs are also available.

 

CLICK HERE for further information

OR, call 0330 0555888

 

 

 

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Will Spring Bring a Boost for Builders

Following the ONS announcement that construction output had fallen by 1.9% in February, the Federation of Master Builders (FMB) has given its reaction to the data.

 

The organisation said the statistics were a warning that ‘the construction sector was still battling in a difficult economic climate.’

Brian Berry, CEO at the FMB said:

“It is concerning to see another decline in construction output of 1.9% this month, and this is compounded by the overall decrease of 1.0% in the three months to February.

“While growth had been seen in January, these figures underline the challenging winter period that UK construction has faced — it is particularly concerning that this decline was in part led by a drop in repair and maintenance work, a sector that had been doing well last year, comparatively to other sub-sectors.Bottom of Form

“Survey responses from the ONS research suggest that this was down to poor weather conditions, with heavy rainfall hindering many projects, and we’ll have to see if warmer spring weather brings a welcome boost for builders.”

“Despite overall GDP being up slightly this month for the wider UK economy, the decline in construction output is holding back substantial improvement.

“As we head into the drier months, the government needs to take this opportunity to help boost that construction activity, which could take the form of helping to step up house building and measures to help owner owners make their homes more energy efficient — these two measures would help drive economic growth.”

 

Source: Development Finance Today

 

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JAMES HARDIE APPOINTS NEW CHANNEL MANAGER

 

James Hardie, the world leader in the manufacture of high-performance fibre cement and fibre gypsum building solutions, has appointed Edward Dunn as Channel Manager to further support trade partners in the North.

Ed has nearly 10 years account management experience working for large national accounts and independent wholesalers.  In his most recent role he worked for Glen Dimplex Flame Europe where he was responsible for sales in the North & Scotland.

As Channel Manager Ed will identify and drive future growth opportunities for James Hardie products, fostering relationships with key stakeholders at distributors, installers, and contractors in the region.

Ed commented:

“I wanted to join a fast-paced company where there was scope to develop my role and make a real difference. James Hardie has a great product portfolio and clear strategy for aggressive business growth.  Since I started with the company I’ve been inspired by my colleagues’ attitudes and the support from the senior management team.  I look forward to contributing to the company’s success in the future.”

 

“The creation of this role underscores our commitment to delivering excellent customer service for our clients and partners,” said Lee Bucknall, UK Sales Manager at James Hardie.  “Ed’s account management experience in the Northern region will help us to develop relationships with the channel, and grow our market share in the area.”

 

www.jameshardie.co.uk

 

 

 

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Raining on Construction Growth

Construction sector hammered by wet weather and high interest rates – holding back UK economic growth

Construction output slumped in February, weighing on overall economic growth, as wet weather and high interest rates hammered activity.

The construction industry’s output for the month fell 1.9 per cent in volume terms, holding GDP growth back to just 0.1 per cent after every other sector showed growth, figures from the Office for National Statistics showed on Friday.

The fall, which marks a 1 per cent contraction in the three months to February, was driven by a slump in activity in eight out of nine sub sectors – with private housing repair and maintenance the only area of growth, adding 0.2 per cent.

Project delayed: Construction sector output weighed down by poor February weather

Non-housing repair and maintenance, and private commercial new work were the worst affected, contracting by 2.5 and 4 per cent, respectively.

Experts pinned the decline on particularly poor weather for the month holding up construction projects after more than double the usual amount of rainfall this February, according to the Met Office.

The rise in the Bank of England’s base rate to its current level of 5.25 per cent has driven mortgage rates higher, leading to a drop in new home purchases and a slowdown in house price growth.

Repair and maintenance work has led construction since 2020 amid weak output in the rest of the sector

Shares in the housing, building materials and merchants sector are down roughly 1 per cent over the last month, led by a 5 per cent drop for housebuilders, as investor fret the potential for interest rates to remain higher for longer.

Nicholas Hyett, investment analyst at Wealth Club, said the construction sector ‘is in the doldrums’ and ‘an interest rate cut could be quite helpful’.

Generally improved economic output globally combined with higher-than-expected US consumer price inflation this week has driven back forecasts for the BoE’s first rate cut and the scale at which base rate will fall this year.

UK GDP grew by 0.1% in February, while January’s growth was upgraded to 0.3%

Current market pricing now suggests that the first BoE cut won’t come until August, while the forecasted scale of 2024 cuts is less than 50 basis points – meaning the current base rate of 5.25 per cent will not fall below 4.75 per cent by year-end.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: ‘Falls in construction activity also indicate a broader malaise the UK is yet to shake off.

‘We’ve known for some time that major housebuilders have been building fewer homes, as people wait for finances to improve before making large financial decisions.

‘All-in-all, the rate of economic growth has slowed, and there’s still a lot of extra coals needed to stoke the UK’s engines.’

 

Source: This Is Money

 

 

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Bumps in the Road to Net Zero


Despite some developers withdrawing from a recent contract round, prospects still look good for landowners looking to cash in

Several renewable companies have terminated fixed price contracts awarded by the UK Government relating to onshore energy projects output prices, sparking concern that renewables development has peaked.

This is not the case, renewables developers are hungry for more sites across Scotland and they are also prospecting for onshore wind sites in England.

Developers withdrew from over 600MW of Contracts for Difference (CfD), citing inflation and increasing costs of raw materials.

Cancelling these contracts amount to bumps in the road, because the UK Government’s commitment to reach net zero emissions by 2050 requires a quantum shift in the way we generate power. Green energy production remains a growth sector and will be for many years to come.

With this in mind, for the next round of CfD, the government is likely to offer more attractive rates that will incentivise investors to develop.

Developers are also now seeking to lease land for at least 35 years, some 50 years. Tens of megawatts of generation on pieces of unused land can lead to hundreds of thousands of pounds of annual rent for businesses.

Rental income paid by third-party developers and operators for onshore wind farms, solar parks and battery energy storage systems of reasonable scale will alter the financial landscape of most landowners – and it will span more than a generation.

To date, the majority of onshore wind farm development has been in Scotland and Wales, however, I am aware that several developers are prospecting for sites in England.

There is optimism amongst some developers that either a change in Westminster and subsequent government policy, will enable large-scale onshore wind development down south. This could create significant opportunities for English landowners, most likely in the north and west, where the land is less densely populated and there is better wind resource.

Renewables and energy developments can only be achieved if developers can get a connection to the national electricity grid network.

The grid is undergoing a massive overhaul and expansion with the electricity licence holders – National Grid, ScottishPower, Northern PowerGrid, etc – under a great deal of pressure to reinforce and upgrade the electricity network. It means more landowners will be affected by the drive for green energy, with the installation of electricity infrastructure across their land.

Anyone faced with the opportunity to lease land for energy development, or facing compulsory electrical infrastructure works, should seek professional advice as soon as possible to maximise opportunities or compensation.

Source: Insider.co.uk

 

 

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£60m accommodation upgrade at RAF Lossiemouth

 

ROBERTSON Construction Northern has successfully completed the build of Peterhead House at RAF Lossiemouth.

The completion marks a ‘significant improvement’ to accommodation for hundreds of personal at the Moray base, with it being the seventh and final of a series of new single living accommodation blocks at RAF Lossiemouth.

The seven blocks and accommodation hub, which provides 24-hour social areas for personnel living in the blocks as well as office space for accommodation staff, were delivered by the contractor for Defence Infrastructure Organisation (DIO), on behalf of the Royal Air Force (RAF).

Robertson Construction Northern, which has a local office in Elgin about six miles from the Moray base, was supported by Tetra Tech as technical service provider for the project.

In total, the seven blocks contain 426 ensuite bedrooms, with each block including laundry and kitchenette facilities while providing comfortable accommodation for RAF personnel. As well as construction, the project included demolition of existing buildings on the site, design, diversion of services and landscaping. Pedestrian access routes and 300 new car parking spaces were built and a number of EV charging points were installed.

All buildings were constructed using modern methods of construction, which sees the blocks being built off-site in sections which are then transported and assembled on site. Robertson explained that this improves the quality of the final product, minimises disruption on what is a busy operational air base, and speeds up the completion of the work. For the final five blocks, even the internal fit out was done off-site – meaning that when the modules were delivered, only minor internal works were needed.

Darren Keddie, project manager at Defence Infrastructure Organisation, said,

 “It’s fantastic to see the conclusion of several years of close work with our contractors and RAF colleagues on this element of the Lossiemouth Development Programme. We want to ensure that our dedicated RAF personnel have suitable and comfortable accommodation to go back to when the working day is done, and I hope and believe they will be happy with what we’ve provided here.”

Ian Phillips, regional MD at Robertson Construction Northern, added,

“We have enjoyed a close working relationship with the DIO and RAF Lossiemouth over the last 25 years and during that time have delivered several strategic projects including married quarters, The Atlantic Building, and this new modern single living accommodation.

“Together with Defence Infrastructure Organisation, we ensured that the accommodation and facilities meet user needs and priorities, whilst ensuring that any disruption to day-to-day activities at the base were kept to a minimum.

“Robertson is incredibly proud to play its part in supporting the defence sector and serving personnel.”

Gp Capt Pete Beckett, Lossiemouth development programme director, said,

“This handover represents a significant milestone on the LDP journey, it is the final project to be delivered in support of P8 and Typhoon growth. Of all the works we have delivered this one, perhaps, means the most as it is directly focused on our people and making RAF Lossiemouth a better place to both live and work.

“My congratulations must go to Robertson Construction Group, DIO Major Programmes and Projects, and Tetra Tech for the successful delivery of this key product; they should all be rightly proud of this quality product.”

Gp Capt Jim Lee, RAF Lossiemouth Station Commander, said:

“The handover of the final single living accommodation block to RAF Lossiemouth represents a huge moment. It signals the end of a long, collaborative journey between the station, defence infrastructure organisation, Tetra Tech and, of course, our local contractor Robertson, to improve the accommodation offer for our people.”

Source: Project Scotland

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Driving the UK’s Green Revolution

New Centre for Doctoral Training to drive UK’s green industrial revolution

A major new Centre for Doctoral Training in Green Industrial Futures (CDT-GIF) has launched to help secure the UK’s position at the forefront of the green industrial revolution. The Centre builds upon the pioneering work of the £20 million UK Research & Innovation (UKRI) Industrial Decarbonisation Research and Innovation Centre (IDRIC).

According to European Investment Bank research, over 80% of companies consider skills shortages to be a barrier to their net zero projects.

The CDT-GIF will play a key role in training the next generation of innovators and leaders to deliver the technologies, systems and solutions required to transition UK industry to net zero emissions by 2050.

With a comprehensive research programme spanning carbon capture, utilisation and storage (CCUS), green hydrogen, CO 2 removal, energy integration and whole systems design, the CDT’s graduates will develop the expertise and skills to tackle the biggest decarbonisation challenges facing industry.

Alongside a four-year research project, the CDT-GIF students will undertake advanced training in the social, environmental, economic and regulatory aspects of the net zero transition in industry, as well as professional development in areas like business strategy, commercialisation, responsible innovation and policy engagement. Students will also have the unrivalled opportunity to visit some of the world’s leading pilot and demonstration facilities.

Delivered by a consortium of four of the UK’s leading research universities – Heriot-Watt University, Imperial College London, University of Bath and University of Sheffield – the CDT-GIF represents a £18 million investment from UKRI through the Engineering and Physical Sciences Research Council (EPSRC).

Professor Mercedes Maroto-Valer, director of the CDT-GIF and UK industrial decarbonisation champion, said:`
“The outstanding research and cross-sector partnerships cultivated through IDRIC have paved the way for this ambitious CDT. By building directly on IDRIC’s foundations, we can hit the ground running to produce the doctoral talent and innovation pipeline that UK industry urgently needs to lead the global energy transition.”

This holistic approach will produce graduates with vital cross-disciplinary skills in systems thinking, industrial literacy, and the ability to contextualise and deploy decarbonisation technologies within the wider global system.

Professor Maroto-Valer added: “Our CDT graduates will emerge as true energy transition leaders, not only technical experts, but also multidisciplinary professionals who understand the complex societal implications of decarbonisation and can effectively engage with industry, policymakers and the public.

“Our program will also emphasise the importance of a just transition which accounts for the impacts on workers and communities affected by industrial decarbonisation. Ensuring fairness and creating high-quality employment opportunities will be key social considerations.

“With these future-focused capabilities, our graduates will be ideally positioned to drive the innovation and public acceptance needed for UK industry to remain competitive in a net zero world.”

Exciting research opportunities are available now for prospective students across the CDT’s core themes through a range of funded positions offered through the CDT’s extensive industry partner network.

Ambitious candidates interested in shaping solutions for the UK’s green industrial future should visit the CDT-GIF website or get in touch to explore projects and apply.

CDT-GIF is also seeking industry partners to co-create research projects and develop talent. If this programme aligns with your research and talent development priorities, please contact cdtgreenindustrialfutures@hw.ac.uk or visit https://greenindustrialfutures.site.hw.ac.uk/

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Residential Construction Bounces Back

  • Awards see slight fall on the previous month but the residential sector bounces back from poor February.
  • A continued positive trend in contract awards in Q1 suggests the sector is looking to emerge from doldrums of 2023.
  • Lack of new applications suggests the crossroads have not yet been passed.

Construction contract rewards remained stable in March following a quarter which had showed a significant increase since the beginning of the year. The value of new contracts was 3% down in February and 1% down on the previous year but remained significantly above the last quarter of 2023, according to analysis from Barbour ABI.

 

Notably, residential contracts were up 60% in February, returning to heights seen in January and were up 62% over the first quarter of the year. Meanwhile, infrastructure fell back to more normal levels following a stellar February but remained 38% up on the same month last year.

 

A new student accommodation facility on Medlock Steet, Manchester will cost £200 million, whilst a new National Grid convertor station at Eastern Green will be built at a cost of £700 million. A new prison at HMP Gartree was also awarded at a cost of £300million. Wates will carry out the work which will commence July 2024.

 

 

 

Barbour ABI head of business and client analytics, Ed Griffiths commented:

“When looking across the first quarter of 2024 it has become clear that both the infrastructure and residential sectors have had strong starts to the year as businesses attempt to get projects off the ground, which is a positive signal the construction sector is attempting to emerge from the doldrums of last year.

“Interestingly in March, we saw Residential and Infrastructure swapping positions in terms of leading overall contract awards value with £2.4bn and £2bn respectively. Together they are pushing the industry awards upwards.”

Elsewhere Healthcare projects were subdued in March following two strong months and Economic conditions continue to stagnate the Hotel and Leisure Sector

Applications continue to confound recovery.

Planning applications have improved in February after a weak start to the year in January but activity levels in most sectors remain low, highlighting that nervousness remains in the sector to commit to future projects ahead of potential rates cuts and upcoming elections.

Infrastructure has increased 33% since last month and remains strong against its long-term average. However, it has not returned to the highs of the end of last year. Residential applications fell once again from £3.1bn in January to £2.9bn in February.

Griffiths continued:

“The enduring story of 2024 so far has been the contradiction between a rise in contracts awarded, sometimes even for projects which have not yet been fully approved, and the continued lack of confidence shown in both in new applications and approvals – which have been contracting since last November. The industry stands at a crossroads where financial and political decisions made at a national level could tip the balance in either direction.”

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