South East

Overview

While detailed planning approvals increased significantly against the previous year, main contract awards and project-starts fared poorly.

Totalling £1.815bn, work commencing on-site in the South East during Q1 2023 declined 27 per cent against the preceding quarter to remain 55 per cent down against the previous year. Major project-starts (£100m or more) had a weak performance, decreasing 20 per cent against the preceding quarter and 62 per cent against the previous year to total £400m. Underlying project-starts (less than £100m in value) declined 48 per cent against the preceding quarter on a seasonally adjusted basis (SA) and slipped back 52 per cent on last year’s levels.

Adding up to £3.499bn, main contract awards in the South East increased 8 per cent to stand 23 per cent lower than a year ago. Major projects experienced a mixed performance, with the value increasing 231 per cent against preceding quarter but remaining 20 per cent below 2022 levels to total £663m. Underlying contract awards, at £2.836bn, increased 1 per cent (SA) against the preceding quarter but stood one-tenth down against the previous year.

Detailed planning approvals in the South East, at £13.669bn, increased 314 per cent against the preceding quarter and 373 per cent against the previous year. This growth was solely driven by a massive hike in major project approvals, which experienced a four-digit increase against the preceding quarter and a five digit increase against the previous year. Totalling £2.592bn, underlying approvals decreased 4 per cent (SA) against the preceding quarter and stood 7 per cent down against the same period a year ago.

Sector Analysis – Project-Starts

Unsurprisingly, private housing accounted for the greatest share (28 per cent) of project-starts in the South East during Q1 2023 with the value adding up to £503m, despite the value of project starts having decreased 71 per cent against last year’s levels. Offices experienced the sharpest decrease of any sector, with the value of project starts declining 87 per cent against 2022 levels.

In contrast, education increased 100 per cent against the same period a year ago to total £332m, accounting for 18 per cent of the region’s project-starts. Education projects starting on-site during the period included the Stephen A. Schwarzman Centre for the Humanities development in Oxford (Project ID: 21126120). Health project-starts also performed relatively well in the South East, with the value growing 17 per cent against the previous year to total £127m. The sector accounted for 7 per cent of project-starts. 

Value of Project-Starts in the South East during the quarter to March 2023 by Sector

Sector Analysis – Detailed Planning Approvals

Infrastructure accounted 73 per cent of detailed planning approvals in the South East during the quarter to March, with the value jumping four-digits against the previous year to total £10.028bn, which is almost solely due to the approval of an £8bn tunnel crossing in Kent (Project ID: 91161081). Private housing, accounting for 10 per cent of the region, experienced a more modest growth, rising 17 per cent against the previous year to total £1.392bn. Offices approvals also performed well, increasing 859 per cent against the previous year to total £916m, making it the third most active sector (7 per cent).

Health at £542m increased 76 per cent against the previous year, accounting for a 4 per cent share of approvals in the region.  Social Housing didn’t fare as well, the sector experienced the sharpest decrease of any, with the value of project-approvals falling 85 per cent to total £51m.

Value of Project-Approvals in the South East during the quarter to March 2023 by Sector

Forecast Construction-Starts for the South East

Note: Underlying projects are schemes with a construction value of £250,000 to £100 million.  Forecast updated in April 2023 p – provisional, f – forecast.
Source: Glenigan