A mixed outlook for healthcare construction

  • 14th May 2024

The healthcare construction industry continues to face ups and downs, with project starts on site falling by 22% in the three months to the end of April, but showing the same percentage increase on the previous year.

According to Glenigan’s Construction Review for May, underlying health work starting on site (less than £100m in value) totalled £802m in the three months to the end of April this year.

At £237m, major projects (£100m or more) starting on site fell 11% against the previous quarter, but grew on last year when no major projects started.

Overall, health starts slipped back 19% against the previous quarter, but increased 57% on a year ago, totalling £1bn.

Totalling £841m, health main contract awards were up 7% against the preceding three months, but 50% down against a year ago.

And major projects totalled £257m, up on the preceding three months when there were no major projects, but down 70% on the previous year.

Underlying contract awards also experienced a poor performance, decreasing 21% against the preceding three months to stand 29% down against the previous year.


The road ahead

Detailed planning approvals – which are often an indicator of the state of the market moving forwards – totalled £1.2bn, slipped back 22% against the preceding quarter and fell 46% on the previous year. Major project approvals, totalling £474m, grew 2% against the previous quarter to stand 63% down against last year.

And underlying approvals, at £786m, experienced a 36% decrease (SA) compared with the preceding three months to stand 34% lower than a year ago.

In terms of regions, the South East was the most-active area for health project starts during the first three months of this year, totalling £219m, having grown an impressive 166% against the previous year to account for 21% of total health project starts.

This growth was mainly down to the £137m Trinity House – Oxford Business Park development.

At £206m, London was the second-most-active region, accounting for a 20% share.

The value of projects starting on site in the capital also jumped 258% compared with last year’s levels.

With a value of £473m, the East of England was the most-active region for detailed planning approvals, having more than tripled on a year ago to account for 38% of the health sector.

Approvals in the South East also climbed 6% compared with the previous year to total £423m, a 34% share of health consents.

Hospital development

Somewhat predictably, hospitals accounted for 54% of health work starting on site during the three months to April, with the value having increased 87% against the previous year’s levels to total £561m.

In contrast, nursing home project starts, accounting for 8% of the sector, fell 35% compared with the previous year to total £79m.

The report also provides an insight into the leading contractors and clients within the sector, with the Department of Health remaining the top client, with 211 projects work £1.3bn, followed by Ellison Oxford, with one project worth £300m; and Canary Wharf with one project valued at £250m.

Canary Wharf, Laing O’Rourke, and Kier topped the contractor tables, with projects worth £500m, £300m, and £226m respectively.

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