CONSTRUCTION AND PROPERTY PROFESSIONALS SET OUT 2019 PREDICTIONS
Below is an article by Josh Morris at Insider Media published on 3rd January 2019. Please click here to view the original article.
Business leaders working in construction and property have set out their predictions for 2019, with the uncertainty on Brexit weighing heavily on many minds. However there is cause for optimism, with a number of large projects continuing across the region.
Consultancy GVA marked its 50th year in Bristol in 2018 and has been involved with a significant number of projects in the city, including The Mall at Cribbs Causeway, Cabot Circus, Temple Quay, and the Avonmouth logistics hub. The company is also merging with global real estate adviser Avison Young.
Gordon Isgrove, GVA’s regional senior director in Bristol, said: “It’s fantastic that we have reached our 50th anniversary in Bristol providing commercial property advice across the spectrum.
“Looking forward to the next 50 years, there are a number of schemes that will help take Bristol forward, such as Bristol Temple Quarter. Ensuring there is the right business space and homes available for this great city to succeed in the future and compete both nationally and internationally, is vital to its success.”
Alan Hope, the chief executive of Exeter-headquartered Midas Group, which is heavily involved in construction as well as housebuilding and building maintenance, believes Brexit has had a significant effect on the market.
He also believes construction as an industry needs to change to make itself more sustainable with improved margins in the wake of the collapse of Carillion.
Hope added: “It’s still a very challenging market to operate in, prices re quite tight, customers don’t want to pay more, and there’s still quite a lot of pressure from the supply chain, there are still skills shortages, so labour costs are rising. And then there’s pressure on the supply chain side.
“While there is quite a bit of work out there, it is a little bit subdued because of Brexit uncertainty. Convincing customers they should pay a bit more is a challenge, so we’re continually looking for ways to improve our efficiency and productivity in order to keep our volumes strong, keep our profits steady, and keep our customers happy.
“The sooner we get through this phase and we bring some certainty to an outcome, I think business will step in and get on with doing business with each other.
“The construction industry needs to make a little bit of a shift and be a little stronger about the margins it commands. The likes of Carillion and now the difficulties we’re hearing around Interserve; for me it kind of shows that contracting has become a bit of an unsustainable model in its current state. Hopefully customers will begin to understand that trying to get an industry to operate on one per cent net margins is not really a sustainable position, so as an industry we need to find a way of being more sustainable in the returns we make, as running a business on one per cent net is not really the way to go.”
Leon Fear of Bristol-based Fear Group has been involved with a number of projects, one of which is over the border in Newport, South Wales.
Fear said: “In my opinion there will be some fall out in the property market which could be considerable in the next 12-24 months and we are likely to see an end to some of the very high prices paid for development sites, as in my opinion peak land value during this cycle was way surpassed during 2018.
“Opportunities will continue to come up and with the positive news of the bridge tolls having now been fully removed, South Wales in particular is set to benefit.
“We are in a good position to acquire new sites throughout the UK, and work with existing landowners to unlock sites for well thought out development in all sectors.”
Daniel Brooks-Dowsett, director in Trident’s Bristol office, said: “If we have a no-deal Brexit we’re not bound by EU law so there will be deregulation. Additionally, a huge amount of construction materials are imported from mainland Europe and any trade tariffs will put construction costs up. This could be compounded by longer delivery times for labour and materials.”