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Foreign Investment could be the answer to regaining UK construction’s momentum

The health of the construction market is directly linked to the economy. However weaker than expected indicators, along with a contraction in consumer spending, tightening credit conditions and slow wage growth could endanger progress. Yet at the same time there has been a shift in the origin of foreign investment, with a significant boost in the number of new investment projects coming to the fore. This could be the bright spot UK construction needs to regain its momentum.

Will Waller

Market Intelligence Lead +44 (0)7787 152 097 Ask me a question

"New and growing sources of foreign investment present a huge opportunity for UK construction."

First quarter economic growth was below expectations at 0.2%, while Q3 rose only very slightly at 0.3%. HM Treasury’s consensus forecast estimates growth to be 1.6% and 1.4% for 2017 and 2018 respectively, but with the construction PMI also having fallen in June, it remains to be seen whether the UK is on course to achieve this. 

Looking at specific sectors, the infrastructure market in particular will remain inflationary.  A number of major projects and programmes are now coming to the fore and these will continue to dominate the outlook and contribute to robust levels of future demand growth.

There is also a lower chance of a slowdown affecting the buildings markets in 2017, although the likelihood increases as we look ahead to 2018. The office market in particular has been boosted by stable or rising demand outside of central London, while the retail sector is also benefiting from pockets of ongoing demand, despite the reduction in consumer spending. 

Foreign Investment could give UK construction the boost it needs 

The UK has seen a 9% growth in the number of new investment projects in 2016/17, with more money invested in the UK by foreign investors last year than in any other European nation. 

The attractiveness of the UK is not just limited to London. Last year, foreign investors accounted for nearly one third of all investment in the regional commercial property market, with Middle and Far Eastern buyers being particularly active and almost doubling the amount of money spent. 

This could signal a significant bright spot for the UK’s construction markets, as foreign investors play a key role in supporting demand, often bringing scale and longevity that can stimulate longer term growth. 

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Will Waller

Market Intelligence Lead +44 (0)7787 152 097 Ask me a question

Arcadis White paper

Foreign Investment could be the answer to regaining UK construction’s momentum

The health of the construction market is directly linked to the economy. However weaker than expected indicators, along with a contraction in consumer spending, tightening credit conditions and slow wage growth could endanger progress. Yet at the same time there has been a shift in the origin of foreign investment, with a significant boost in the number of new investment projects coming to the fore. This could be the bright spot UK construction needs to regain its momentum.

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