Industry update: Construction services

Despite the various obstacles that were seen throughout 2020, the outlook for the construction industry remains positive, with growth rate estimates expected to continue at a rate of 12.9% in 2021 and 5.2% respectively in 2022.

Construction output is typically considered to be highly sensitive to the overall health of the economy. Subdued growth reduces demand for new industrial and commercial facilities, and a loss of income and lack of confidence negatively affects residential construction and refurbishment demand.

In our latest industry report, Richard Staunton, Gerald Edelman Partner, VAT, and Jonathan Guy, Assistant Manager in the Gerald Edelman Transaction Services team provide an overview of the industry’s recent performance, market trends, and key factors that will drive growth within the sector and maintain the strong M&A activity.

Key takeaways from the report include:

• The commercial sector, comprising of retail properties such as shopping centres, has been dramatically impacted by the outbreak of the pandemic. Whilst the impact on the high street has been highly publicised, it is becoming clearer that the restrictions imposed during the pandemic were only a catalyst for a substantial increase in an ongoing trend of decline, as research shows a 10% decline in footfall in shopping centres between 2012-2019.
• There have been significant interruptions to the industrial segment due to covid-19 restrictions. However, the pipeline for industrial projects is now starting to look strong with the HS2 unsurprisingly dominating the list.
• In 2021, revenue generated from the residential segment totalled £53.4bn, a decrease of 28.9% on the previous year. This was largely driven by a slump in housing construction which represents 60% of total sector revenue.
• Despite a strong start to 2020, deal activity in the year declined by 6%. This was mainly due to a significant shock to deal volumes in the second quarter, with the market experiencing a recovery later in the year.

To learn more, click below to see the full industry report: