Residential development booms in key cities

January 31, 2018 / Isla MacFarlane
Residential development booms in key cities

UK regional cities are reporting record levels of construction activity as developers’ confidence for city centre residential development remains strong.

The latest reports in the Deloitte Real Estate Crane Survey UK series monitor construction activity in Belfast, Birmingham, Leeds and Manchester. Each city has seen a sustained or increased level of development across a range of sectors including offices, residential, hotels, retail, education and student housing.

Simon Bedford, partner and regional head at Deloitte Real Estate, said, “Residential development stands out this year. The surveyed cities have shown a marked increase in housing development, in some cases doubling activity from the previous year. Our UK crane survey data shows a collective total of nearly 17,000 residential units currently under construction in these cities, ensuring housing targets are being taken seriously and developers are striving to meet demand.”

Joe Thornton, founding director of Cast, a real estate and construction consultancy, added, “The result of Deloitte’s annual crane survey shows how the UK’s regional cities continue to go from strength to strength. At a time of severe housing shortages in UK cities, increasing the delivery of homes is vital. However, the resilience of the industry should not lead to complacency on the industry’s part.

“As a sector, we must continue to look at innovative and efficient ways to deliver new homes throughout the country, taking a long-term perspective on the delivery method that seeks to plug the skills gaps and improve build quality. If we can’t address these issues, construction activity in the regions is likely to go south.”

In Birmingham

Exploring each region, the Birmingham Crane Survey identified 24 new construction starts breaking ground in 2017. The city’s residential development has accelerated with 13 schemes starting construction, up 30% on the previous year, delivering 2,500 new units in 2018 alone. Student housing schemes are also up (53%) and set to deliver at total of 1,782 bed-spaces. Birmingham’s office development has surpassed one million sq ft for the second consecutive year, with over 1.4 million sq ft currently under construction, affirming developer and occupier confidence in the city.

In Manchester

Manchester’s city centre residential sector shows no signs of slowdown as 20 new residential schemes started construction last year, exceeding 2008 levels for the second year running. Across the 41 housing schemes, 11,135 units will be delivered to market. The report also notes significant further progress in the office sector with five new developments bringing the total office space currently under construction to 1.5 million sq ft. Developers are also not shy of building upwards, as six residential schemes will exceed 25 storeys on completion.

In Leeds

Similarly, in Leeds the number of residential units under construction across the city centre is at its highest in a decade – 1,586 units across five development sites. Leeds has also witnessed further growth in the higher education sector with four new starts recorded adding over half a million sq ft into the development pipeline. Leeds continues to deliver good volumes of new office space with three new construction starts in 2017.

In Belfast

The Belfast Crane Survey, now in its second year, has recorded nine new schemes and a total of 25 schemes under construction. Residential development, albeit lower in volume than other cities, has started to come forward. However, it is hotels that dominate Belfast’s figures with over 1,000 new hotel rooms currently being built and all due to complete this year, the highest number of any of the cities in the survey.

And in Dublin

In addition to the four UK cities, the crane survey series has embraced Dublin’s development activity for the first time. Ireland’s capital city has over four million sq ft of office space under construction, as well as 3,528 residential units. Dublin’s crane survey has also recorded 13 major student accommodation schemes under construction, set to deliver 4,529 bed-spaces when all completed.

John Assael, chairman of Assael Architecture, said, “Today’s crane survey shows the apparent resilience of the UK and Ireland’s construction industry in the face of systemic challenges such as Brexit and the skills crisis. While regional growth is always welcome, the results do mask deep seated issues with the current delivery and procurement methods of the construction industry, which were emphasised with the collapse of Carillion.

Construction activity may still be buoyant in the UK’s regional cities, but as skills shortages and uncertainty begin to bite, the industry’s flaws will become increasingly apparent.”

Bedford concluded, “The results of our crane surveys reflect the growth and resurgence in the regions, surpassing last year’s record-breaking figures. Sentiment towards city centre development is buoyant across all sectors, but it is perhaps the residential private rented sector that is the stand out for 2017.

“The unparalleled scale and volume of development is backed by significant investor confidence, strong business communities and an influx of new talent. The demand for property, particularly in the residential market, has never been more evident.”

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