Construction starts
in the education sector rose strongly in the first quarter of 2018, according
to Glenigan's Construction market analysis, which is expected to stabilise
after a weak run last year.
The underlying value
of project starts for construction in the education sector slumped 19% last
year, but Q1 2018 brought a rise of 8% as a surge in higher education spending
begins to offset weak spending on schools.
Glenigan’s economics
director Allan Wilen said: “Recent years have seen strong growth in primary
education provision in response to rising pupil numbers. As these pupils age,
the focus is switching to secondary education facilities.
“Despite both a
positive backdrop for university
construction and demographic trends requiring investment into the schools’
estate, flagship government spending programmes disappointed in 2016 and 2017.
The gap between required and actual construction investment continued to
persist and produced a significant downturn in the value of underlying starts
in 2017.”
The value of
education projects securing planning permission dropped by 5% in 2017, but this
masks weak performance in schools.
In 2017, the
underlying value of school building project starts fell a third, which came
after a 10% drop in 2016.
Regional differences
are evident. In Scotland, for example, repair work looks likely to increase
after a report from the country’s Accounts Commission identified a swathe of
defects in at least 20 public buildings including schools after a wall collapse
at Oxgang Primary School in 2016.
At the opposite end
of the education system, investment in higher education is starting to boom,
which has begun to influence the value of contract awards.
Education-related
work let by clients in the 12 months to Q1 2018 in Glenigan’s ranking of the
top 100 clients totaled £3.1 billion – up from £2.2 billion in the same period
12 months earlier.
The higher education
sector made the biggest contribution and provided 74% of contract awards for
education work let by top 100 clients.
This has been driven
by a swathe of spending by universities and increased investment on the student
accommodation sector.
Overseas companies
are funding some higher education accommodation, often primarily aimed at
foreign students, such as Singapore-based Q Investment Partners (QIP), which is
building a £20 million scheme in Sheffield.
Bowmer &
Kirkland regional director Steve Chambers said: “We have a specialist team in
place for projects such as QIP’s Sheffield PBSA development. We are currently
in the process of completing a scheme for Chinese investors, with a
construction value of £67 million, which is also in Sheffield. We understand
how to build quality housing primarily aimed at overseas university students.”
In Glenigan’s
forecasts, student accommodation is included under social housing and prospects
for the core education sector are less ambitious.
“We are cautious
about the sector’s prospects near term given political uncertainties, funding
restrictions and a sharp fall in projects securing detailed planning approval,”
added Mr Wilen. “Looking further ahead, we anticipate a gradual recovery in project
starts during 2018 and 2019, as local authorities and academies address the
need to raise secondary school capacity.”
If this work begins
to come through and higher education spending continues, the prospects for this
sector could improve drastically but that depends on government persuading
academies to invest in much needed capital projects.
