As we near the end of the January in this New Year, I want to share with you my reflections on 2023 and the prospects for any improvement in 2024.
2023 was challenging, with the last quarter in particular showing the impact of continued high interest rates, the sledgehammer which the Monetary Policy Committee is using to bring down the rate of inflation. This was combined with the ongoing effects of the Covid, the loss of markets through Brexit, continued high material prices and skills shortages. It was no real surprise to learn in November that Glenigan predicted a downturn in construction for the year of 20%.
I am not alone in recognising the difficult market conditions in which we find ourselves at the start of this year. Reports in the press show that the financial position of contractors, subcontractors, manufacturers, suppliers and architectural practices is certainly not as strong coming into 2024 as it was in 2023. Many report that new projects in the pipeline are threatened by either delay or even worse, complete cancellation as a result of these factors. For the building industry, there is work, but it’s coming through too slowly.
But is it all doom and gloom because building owners and users are not moving into their new buildings? Previous recessions have shown that in times like these, there is a concentration on fixing, maintaining and even extending existing buildings. This makes sense as the existing building will now need to last a few years longer. I predict far more concentration this year on planned maintenance, remediation and recladding. In addition to all this, we still need to remove flammable cladding and construction materials from hundreds of high-rise apartment buildings throughout the UK.
Let’s also not forget the impact of the Building Safety Act in 2024, which will continue to bring its own set of challenges. As the detailed requirements become clear, clients will be turning to façade professionals to facilitate compliance through Gateways 1, 2 and 3 under the gaze of the Building Safety Regulator.
The Glenigan report is more positive going forward with construction growth predicted at 8% for 2024 and 7% for 2025. I expect that interest rates will begin to come down from sometime in Q2, if the inflation graph continues generally downwards, bringing some optimism and a more ready flow of money into development.
There are uncertainties and perhaps we can see some light at the end of the tunnel. But whatever happens we remain firmly committed to delivering clients an exceptional, cost effective and professional service and we look forward to working with all our clients and project partners through 2024.
Patrick Ryan - Director BSc PhD CEng MIStructE FSFE