Opportunity beckons for construction industry
AT the turn of a new decade, Scotland’s construction industry is waiting with bated breath to see what the next 10 years hold. It goes without saying that the past decade has been a mixed bag. In the aftermath of the 2008 financial crash, Scotland’s construction industry unsurprisingly bore the greatest brunt of double dip recession, and as we started 2010, it had shrunk by nearly a quarter. The industry has since recovered and, despite the dips caused by recent political events in Scotland and the UK, 2019 started relatively buoyantly.
As a business we secured several new contracts and prestigious projects for Diageo, Jaguar Land Rover and the European Bank for Reconstruction and
Redevelopment at the Chernobyl Nuclear Power Plant in Ukraine. However, by the end of April, political uncertainty returned, resulting in an eerily similar feel to 2008. Whilst the recent election results will hopefully mean Brexit uncertainty diminishes, the gains made by the SNP increase the prospect for a second independence referendum. As a result, whilst we expect the rest of the UK sector to stabilise, Scotland’s political climate is unlikely to improve any time soon and this will impact investment decisions, and ultimately construction.
Irrespective of the political landscape, the commercial property sector has seen strong performance across the whole of the UK. London is thriving and we’re already seeing roughly a 70 per cent increase in planning applications for office refurbs and alterations for 2020, spurred on by a lack of undeveloped prime new build sites available across the capital. Glasgow and Edinburgh, which suffer from a similar shortage of office space, will however see several large-scale projects come into completion next year, easing both demand and growth opportunities.
Elsewhere, the whisky and gin boom will see the drinks sector continue to invest in new projects and sites across Scotland – adding to its £500m investment in the past five years. And, the residential, care homes, office and retail repurposing sectors should also see continued growth.
WE see the move towards more sustainable and carbon-efficient buildings as one of biggest areas of change and opportunity for Scottish construction. Currently Scotland has the most ambitious carbon reduction strategy throughout the UK – aiming to become a net-zero emissions economy by 2045. In the education sector, we have already had a multi-million-pound funding agreed for an innovative, low-carbon design for schools, which not only helps improve wellbeing for pupils, but also reduces running costs and carbon footprints for local authorities. These types of projects aren’t confined purely to the education sector and will be replicated across both the public and private sector.
With Scottish exports soaring to £32.8 billion in 2018/19, 2020 holds even greater opportunities abroad, and Scotland’s construction and property companies should look overseas to facilitate ongoing growth. Expanding into new territories offers firms the chance to showcase their expertise, access new sectors and enter new markets. In the past decade, we have opened offices and cemented partnerships in the UAE and USA, and these investments are helping to grow our business and open us up to new business opportunities with some of the world’s biggest tech giants.
Whatever the outcome of Brexit or the prospect of Indyref2, the political climate will create hurdles in 2020 and beyond and the industry will need to remain flexible and agile if it is to adapt to changing market conditions. If navigated properly, there are huge opportunities for firms to capitalise on the drive toward sustainability and expand to overseas markets, helping to build a stronger construction sector in Scotland for the next decade.