The January 2025 edition of Glenigan’s Construction Review reports that, despite significant economic turbulence in 2024, it emerged as a pivotal year for construction, with significant gains in major project starts and steady growth in underlying activity.
Overall, work starting on site averaged £10,372m per month in 2024, up 20% from 2023. Major projects (£100m or more) saw a 58% increase, underscoring renewed confidence in large-scale developments. Contracts valued at less than £100m – what Glenigan calls underlying project-starts – were up by just 1%, which is significantly less than inflation.
Among the strongest performing sectors in 2024, hotel and leisure construction starts (sub £100m) soared by 30%, while education projects rose by 7%. Civil engineering also flourished, with starts in infrastructure (up 17%) and utilities (up 14%) leading the charge.
The southeast emerged as the UK’s growth leader with a 17% increase in underlying project-starts. Northern Ireland (+23%) and the southwest (+13%) also outperformed, while London faced challenges with a 15% decline.
On the down side, main contract awards dipped 4% in 2024, averaging £9,595m per month, reflecting caution among developers, Glenigan said. Underlying awards decreased by 5%, while major projects also saw a 4% drop compared to 2023.
Similarly, detailed planning approvals fell by 19% overall, with major projects hit hardest at a 34% decline. Underlying approvals dropped by 6%.
Glenigan economic director Allan Wilen said: “While 2024 brought challenges, the construction sector demonstrated remarkable resilience, supported by strong gains in major project-starts including renewable energy and rail projects. Despite budget constraints and concerns over tax changes dampening growth in late 2024, the outlook for 2025 is positive.
“Increased government and household spending, as projected by the OBR, will likely provide a much-needed boost across key construction sectors, particularly private housing, retail, and leisure. Private housing is expected to see a 13% growth in project starts, with build-to-rent and SME-focused initiatives broadening development activity. Retail projects, while modestly forecasted to grow by 1%, are set to benefit from a more positive economic outlook. The hospitality industry is poised for a revival, with hotel and leisure construction starts predicted to rise by 6% with landmark projects like the £250m Therme UK development providing an additional boost to sector activity.
“Elsewhere, industrial and civil engineering sectors are set to expand, driven by projects such as the £8bn Hornsea Four development and £350m Altalto Immingham facility. Meanwhile, office developments are on track for an 18% growth in starts, with investment in data centres, including the £400m G Park Docklands Data Centre, reflecting the rise of AI and digital transformation.
“This broad-based growth presents opportunities for contractors to capitalise on emerging trends, especially as major investments in infrastructure, education, and health – such as the £215m Cambridge Children’s Hospital and the £80.3m Ardrossan Community Learning and Innovation Hub – gain momentum. With resilience and adaptability, the industry is well-positioned to meet these demands and thrive in 2025.”
