Coronavirus Market Update – 1st May 2020

This week, the trade press has reported more stories of contractors and developers planning to reopen sites, after adapting them to include social distancing measures, and accordingly we’ve started to see the number of suspended sites reduce.

As of yesterday, there are 3,152 sites still closed as a result of coronavirus, which is down from the 3,212 we reported last week. Work has resumed on 11% of sites that were initially suspended at the outset of the lockdown and we expect to see this number rise steadily over the coming weeks, as an increasing number of housebuilders begin a phased reopening of their sites. Persimmon have already reopened a number of their sites this week, which is an encouraging sign, and so we’re sure to see the impact on the private housing sector reduce, which currently has 60% of its sites suspended.

Project starts

If we turn our attention to project starts, our data shows that the value of projects starting on site in April has fallen by around 50% compared to April last year, but it’s encouraging to see that 162 large-scale projects did begin on site last month.

While this understandably includes a number of projects related to the coronavirus outbreak, such as the temporary nightingale hospitals, projects started in all industry sectors and throughout the UK, showing that where possible the industry has been keen to continue work.

Development pipeline

More good news is that overall, the early development pipeline still remains relatively firm.

The number of planning applications being published by planning authorities has averaged 1,331 a day over the last week, which is just 15% down on the daily average prior to the COVID-19 lockdown. Published decisions follow a similar trend, being 13% lower.

This decline is relatively modest and we see local authorities continue to adapt to the lockdown environment to ensure there is a minimal backlog when processing applications and decisions. We’ve seen a number of councils move their planning committees online and this week members of our research team have been able to tune-in to local authority committee meetings.

And we’re also seeing positive stories in the more immediate pipeline.

This week we have added an average of 70 bidders per day. This is the highest we have averaged since lockdown began, where figures had decreased to around the 50 to 60 mark. It also shows a strong return to the pre-COVID era when we were adding an average of 90 bidders a day. The decrease may be due to delays in the decision-making processes and we’ve also seen a number of contracts where the tender deadline has actually been extended to allow contractors more time to submit bids, while potentially operating with a reduced workforce.

We’ve also seen an increase in the number of main contract awards over the past two weeks, following a continual decline from mid-March, which hints at a returning confidence among clients to progress future projects.

Therefore, as lockdown restrictions ease we anticipate a rebound in the number of invitations to tender and contract awards.

All-in-all, this has been a positive week for construction, and our data shows that we can remain optimistic for the future of the industry.