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Construction builds up work in Wales

February 23rd, 2010

CONSTRUCTION in Wales performed better than the rest of the UK in the final quarter of 2009, according to latest research.

The data, compiled by the Royal Institution of Chartered Surveyors, found the sector in Wales did better than every other UK region and nation.

Rics’ survey found that all other regions reported a decrease in workloads in Q4, with 12% more chartered surveyors reporting a decline compared to a rise.

However, Wales saw 20% more chartered surveyors reporting a rise in workload compared to a fall.

Looking forward, overall expectations for workloads, employment and profits for the next 12 months are all fairly downbeat.

Workload expectations for future activity deteriorate with an equal number of surveyors expecting a rise or a fall – this compares drastically to Q3 when 50% of chartered surveyors anticipated an increase than a decrease in workloads.

Similarly, an equal number of surveyors reported an anticipated rise or a fall in employment, but worryingly profit expectations decreased. A balance of 50% more chartered surveyors reported a drop in profit expectations compared to 33% in Q3.

This shows that profit margins are being squeezed as competition for the limited amount of work on offer intensifies. Two common themes identified by surveyors that are hampering future activity are general election uncertainty and a continued lack of development finance.

Cathy McLean, director of Rics Wales, said: “It is very positive news for Wales that it outperformed the rest of the UK in Q4 and this would have been a welcome boost for the industry at a difficult time of year.

“A lot of that increased workload was driven by public sector development and with a general election approaching, it is not surprising that expectations for future workload is uncertain and stalling new projects. The Q4 figures may have been positive, but looking forward the evidence shows that the construction sector has not yet emerged from the effects of the recession.”

The Construction Market Survey showed that 43% of chartered surveyors reported a rise than a fall in public sector workload (housing and non-housing) in Q4 compared to 20% in Q3.

In comparison, the private sector workload decreased in Q4 where 14% more chartered surveyors reported a fall than a rise in private sector commercial workload.

In Q3, 20% more chartered surveyors reported a rise. In the private industrial sector, 14% more chartered surveyors reported an increase in workload in Q4, compared to 25% in Q3.

An equal amount of chartered surveyors reported a rise as they did a fall in the private housing and infrastructure sectors.

Simon Rubinsohn, Rics chief economist, added: “The acceleration of capital spending programmes seems to be faltering and our members’ perception is this is due to more caution being exhibited by the Government in the approach to the general election.

“Coupled with the fact that development finance is still in very limited supply, this sector is likely to remain locked in recession for at least the first half of this year.”

John Antoniazzi, partner at Deloitte in South Wales, said: “The real question is when will the private sector consider that the demand for property is sufficiently stabilised for them to turn their order tap back on?”

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