Healthcare construction market shows signs of a revival

Activity up 14% on last year, with Department of Health second biggest client across all sectors

There are signs the construction market is improving following the outbreak of Coronavirus last year

The healthcare construction market is showing signs of recovery, supported by government investment in new hospitals, which has led to a 14% increase in activity since last year.

Between May 2020 and April this year the Department of Health was near the top of the league table of construction clients, with just over £2billion worth of projects underway – a total of 368 schemes – second only to the Department of Transport, which has invested more than £4.9billion in the past year.

While the value of health starts slipped 9% against the preceding three months to April this year, it was 14% higher than a year ago, according to the Glenigan Construction Review for May.

However, activity within the health sector is still 14% lower than two years ago.

Across all construction sectors, the report shows that although project starts are still below pre-pandemic levels, the last few months have seen a ‘strong and encouraging rise’.

Furthermore, the development pipeline is ahead of 2019 levels, pointing to a sustained recovery in project starts over the coming months.

Industry confidence is also high, with many contractors announcing strong order books

The value of projects starting on site across all sectors averaged £5,212m per month during the three months to April; an 18% increase against the preceding three months, and 37% higher than a year ago.

And the value of contract awards rose 36% against the preceding three months to stand 50% up on a year ago and 12% above the same period in 2019.

Furthermore, the value of work securing detailed planning consent during the three months to April rose by 3% against the preceding three months and was 37% higher than a year ago.

The Glenigan Construction Review monitors activity across all sectors, including healthcare

The leading contractors across sectors from May 2020 to April 2021 were Kier, Morgan Sindall and Royal BAM.

The report states: “Most sectors achieved strong growth during the three months to April compared to the severely-impacted performance due to the first national lockdown, last year, although underlying starts were still 12% lower than during the same period in 2019.

“Nevertheless, a strong recovery is underway.

“Underlying project starts during the three months to April were 18% up on the preceding three months, with most sectors and regions experiencing growth.

“Industry confidence is also high, with many contractors announcing strong order books.

“We expect this to help sustain growth over the coming months.”

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