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North East construction sector set to thrive, says KPMG head

For many constructors in the North East, the sector has been synonymous with uncertainty since Brexit.

However, with a new year now firmly underway, many companies in the region are slowly seeing development opportunities rise and the precarious nature of H2 2016 lessen.

Giles Taylor, KPMG’s head of property and construction in the North, is one business leader anticipating a step change and encouraging construction firms in the region to adopt a positive outlook.

He explained: “Demand for affordable housing across the North East remains high. This, combined with low interest rates, makes for a bright outlook for the residential construction market in 2017.

“Housebuilders are already exploring innovative building solutions to capitalise on this demand, with Igloo Developments’ residential construction project on reclaimed brownfield land on the banks of the Ouseburn being just one example.

“We also expect developers to continue to take advantage of the high demand for student accommodation in Newcastle, following growing regional firms like Adderstone Group, which posted a 38% profit rise on the back of its completion of the Stepney Yard and Union Studios student housing schemes in 2016.”

Despite existing challenges, Mr Taylor is actually forecasting thriving sector growth this year.

He continued: “There is also a healthy pipeline of commercial developments across the region. A great example is the continuing expansion of Cobalt Park, just outside Newcastle.

“We’ve seen a number of large organisations put down roots here in the last year, with the construction of more office space firmly on the cards for 2017. This bucks the national trend that has seen schemes put on hold as some corporates delay investment decisions pending clarity on Brexit.

“While the pipeline is strong, challenges do remain. The industry as a whole has suffered from an endemic skills shortage in recent years.

“To tackle this in 2017, firms across the North East need to make a concerted effort to retain the talent being nurtured in our universities and offer attractive, long-term opportunities for young people.

“Additionally, rising material costs, the fall in the value of sterling, and the political uncertainty throughout 2016 have all hit the construction sector hard in the past 12 months.

“It’s important to remember that amidst this macro-economic uncertainty, the fundamentals of business still apply. Demand remains high and contractors that look beyond political and economic instability, plan for the long-term and produce a high-quality product, with high-quality customer service will succeed.”