Concerns on commercial construction
CONSTRUCTION: Yorkshire and the Humber's commercial construction sector has seen the sharpest decline in output of all the UK regions.
A study reveals how the UK's commercial real estate (CRE) construction market faces a long, slow recovery, with falling output values and faltering demand fuelling the decline.
Overall output values across the UK dropped by 32 per cent between 2007 and 2011 to £28bn – their lowest level in ten years – representing a £13bn loss to UK Plc.
This compares with a 45 per cent drop in our region, which equates to a £1.8bn reduction in construction activity.
The findings were published yesterday in a report by commercial insurer RSA and the Centre for Economics and Business Research (CEBR).
Entitled Castles In The Air, it shows that despite last week's positive GDP figures, the recession has led to a peak-to-trough decline of 42 per cent in CRE construction output nationally.
This figure is predicted to drop again next year to £27bn and is not expected to return to positive growth until 2014 – when only a modest 0.3 per cent rise is anticipated.
RSA's Paul Greensmith said: "The UK's commercial real estate sector has been hit hard by the recession, and with CRE growth so closely tied to GDP, it's not surprising we've seen such a sharp decline in output values since 2007.
"The Yorkshire and Humber region has been significantly impacted by the recession.
"While a return to the pre-recession highs of 2007 may not be wholly realistic, what's important now is that local developers approach new investment opportunities sensibly and with sustainable growth in mind."