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News Release

Scotland

Scotland sees resurgence in new construction activity as volumes rise


Scotland, 6 October 2015 – Commercial construction in Scotland has continued to rise, during the second quarter of 2015, according to results from the latest JLL and Glenigan UK Commercial Construction Activity Index.

Total starts in Scotland for the year to end of June totalled £2.5 billion, an increase of 17.6%, making Scotland the second best performing region in the UK, after the East of England.

The regional picture across the UK over the second quarter shows that Scotland, along with the North West and West Midlands, are beginning to see resurgence in new construction activity. Growth in the North West increased by 16.8%, and the West Midlands followed suit with an increase of 9.0%.

London, however, still represents around a quarter of all UK construction activity, and while the South East was relatively flat in construction terms, the East of England saw an increase of 23.0% - the single strongest increase in the regions.

The resurgence outside the South East may be related to the fact that the strongest individual sector performer was industrial & logistics, which saw £3.2bn of starts over the 12 months, a 12.8% increase on the £2.8bn recorded in the Q1 figures. Education – up 11.3% to £6.2bn – was also particularly active. In contrast, the core commercial sectors of offices (£6.1bn, down 4.6%) and retail (£2.9%, up 4.7%) witnessed more stability in construction volumes.

Ken Frew, Director of Building & Construction at JLL Scotland said: "For the second consecutive quarter, Scotland has proven to be one of the top two performing regions in the UK for new construction starts. This suggests that Scotland, like other major urban centres outside London including Greater Manchester and the Birmingham conurbation – are beginning to see the bounce back that had previously been concentrated in the South East.

"However it's not all good news. Construction costs have risen steadily through Q2 2015 with contractor order books experiencing strong growth, particularly in Scotland's big three cities. Confidence throughout key trades and supply chains has continued to dictate construction procurement activity with low risk two stage and negotiated appointments necessary to secure contractor programme commitment and product quality. Significant risk transfer is no longer feasible or commercially viable.

"A surge in post-election business and investment decision making was noticeable and is expected to result in increased construction activity in late 2015 and throughout 2016. This will continue to drive costs up and stretch the markets ability to deliver, particularly at short notice. Robust portfolio and project capital planning will be increasingly critical to businesses."