Welsh market sustained by developments in its major cities claims new construction market intelligence by RLB
Local construction and property management consultant, Rider Levett Bucknall (RLB UK) claims the stability of the general economic situation in Wales is evident in the number of construction projects that are continuing, according to its latest Construction Market Intelligence report Q2 2024.
Steady price rises forecast for short and long-term outlook in Wales
The built environment consultants who are based in Wharton Street in Cardiff predict that tender prices will continue to rise from current levels in line with the cost of living and forecast that the uplifts in prices will be steady, rather than the drastic increases seen in previous years. Large projects are continuing across the major Welsh cities which will keep prices stable. Particularly well performing are the three biggest Welsh cities – Cardiff, Swansea, and Newport.
Looking beyond the next 12 months, tender prices for Welsh projects are expected to rise steadily in line with industry forecasts. The scaling down of Tata Steel’s operations at Port Talbot will mean there will be greater reliance on steel from India and China, which could lead to price turbulence.
Specialist contractors are still extremely busy in the region, but their costs are levelling off and MEP tenders continue to be constant. Timber prices are slowly reducing, and steel prices are slowly increasing. Labour resources remain at capacity and wages remain stable.
With the ongoing demand for new houses and apartments, residential sites and planning consents are still being secured at pace. But this does not necessarily translate into starts, as developers landbank sites due to the effect of high interest rates on the sale of private units and the viability of build-to-rent schemes.
An influx of new investment into the data centre and renewables sectors will quickly swallow up available resources in the supply chain, which will have impacts on tender prices.
While major projects are getting underway, new starts overall are at a reduced rate compared to the previous quarter. Planning is still very slow with projects being held up by low staffing levels within local authorities. While clients are still positive about bringing developments to market, there is greater awareness that there could be delays before their projects start on site.
Regional Sector Focus
Commercial
New data centres and laboratories are in development across Wales, with some of these projects starting on site this quarter. Investment in technology and upgrades to existing facilities is a strong growth pipeline.
Education
Refurbishment and expansion projects designed to create more school spaces are a key area of focus across the education estate in Wales.
Energy
The energy sector in Wales is emerging slowly with acquisitions of several large sites that are planned for solar farms and battery storage facilities.
Residential
Residential planning consents are still being secured at pace, but not translating to starts on site as developers bide their time. Levelling out of interest rates may improve activity but viability is still a challenge on many projects. Shared ownership schemes continue to experience high demand.
Dan Walker, Associate in RLB Wales, “The construction market in Wales is feeling more positive and optimistic about the outlook now that several large projects are going ahead and projects that have been in planning for several months are being approved. The education sector, in particular, remains strong. There are several high-profile projects that are due to start on site, while universities and colleges are beginning to implement phases of their masterplans that have been in development for lengthy periods of time.”
For the full RLB’s full Construction Market Intelligence Q2 2024, please click here.
