Snap Analysis 2021 round up
2022 is here. The start of a New Year means setting new goals, targets and objectives, whether that be for yourself or your business. To help develop your businesses 2022 strategy AMA Research along with Barbour ABI have done something a little different this month: We are delivering you the story behind the data which created a record-breaking year for construction, with a special Annual Review edition of Snap Analysis.
This blog will tell you the story of 2021, highlighting just some of the vast amounts of data within this report that has been fact checked and quality assured by the largest research team in UK construction. To help your business exploit the gaps in the market and stay ahead of your competition this year. The sectors, sub sectors and regions which were the drivers of last year’s success will all be revealed!
Our Chief Economist, Tom Hall has delivered his opinion on the year for construction. He states “2021 ended being a very positive year for contract awards after three subdued years – primary causes being the uncertainty caused by Brexit and the impact of the Covid-19 pandemic.”
“At this stage, 2021’s strong showing is best interpreted as the filling of a weak pipeline as the outlook has improved: with some certainty over the form of the UK’s exit from the EU and an improving Covid-19 situation. Certainly, the rebound in some of the commercially sensitive sectors such as residential and offices bodes well for the near term.”
Barbour ABI industry reports make levels of activity crystal clear in every area of the pipeline, whether that be contract awards, planning approvals or planning applications.
To kick off, 2021 was an outstanding year for contract awards. 2021 was the strongest year for contract awards since 2015, summing up a robust £72bn. As the nation grew more accustomed to the coronavirus pandemic, contract awards began to strengthen a weak pipeline resulting in a 27% growth from 2020. Taking into account the setbacks from the often spoke about Brexit and Covid over the past 3 years, 2021 saw a releasing of activity which reinforced the pipeline for the industry.
The reinforcement of the pipeline was primarily due to impressive growth of the residential and industrial sector. The rise of the industrial sector was almost entirely from the demand for warehousing and logistics. Figures show a 97% growth rate for the sector between 2020-21, with the value of contract awards increasing from £5.5bn to £10.8bn. This growth rate could see the industrial sector becoming the 3rd largest in the industry, if trends were to continue at a similar pace in the coming years.
In terms of the residential sector, it was yet another strong year. Top of the board when it comes to contract award values with an annual value of £24.2 billion, a 19% increase from 2020. This is the highest value that’s been seen for this sector since 2017. If activity continues to strengthen, can the sector go further in 2022 and beat this figure again? The driver for residential success in 2021 was driven by activity in the predicted region, London. However the West Midlands and Yorkshire were also hotspots for residential projects across the year.
A positive figure discovered within in the annual review of Snap Analysis was that the H2 monthly average of £6.9bn was the highest figure seen since records started. Finally for contract awards, the seemingly huge success in 2021 can be interpreted as a filling of the pipeline rather than a return of animal spirits, so a note of caution as many uncertainties remain.
Moving down the pipeline, 2021 saw the recovery of planning approvals to £95bn, which was an 8% increase from 2020 and a £1bn bigger finish than 2019. Overall activity still remains slightly lower than the £103bn high in 2016. However on a positive note, activity was 7% stronger in the 2nd half of 2021 compared to the 1st half, as the world began to get back on its feet after the devastating impact of the Covid-19 pandemic.
The main activity for approvals has pivoted from residential and hotel/leisure to infrastructure and warehousing. The industrial sector broke all of its previous records with a massive £11.7bn, the bulk of this activity was largely focused in warehousing, but over the course of the year factories began to strengthen also.
Another highlight sector was the commercial sector. Unexpectedly the sector bounced back to pre-pandemic levels with a 37% year on year growth rate. The driver for this bounce back was thanks to offices and date centres. Potentially a surprising figure as the rise of flexible/remote working rose in 2021.
Following the pattern of other planning stages, in 2021 approvals returned to levels seen in 2019, providing the industry with some confidence for the future. Across Great Britain, the North East experienced the largest growth when compared to both pre pandemic and 2020 levels. Planning approvals have recovered in almost all regions however Wales, the West Midlands and Yorkshire remain around 10% lower than 2019.
The last stage to review is planning applications. This stage of the process also recovered to pre pandemic levels with £110bn in 2021, a 14% recovery after a 10% fall in 2020. The data shows that the recovery was driven by activity in the infrastructure, residential and industrial sector.
Planning applications can be described as a mixed picture. The data tells us that the residential sector recovered to levels seen in 2019 with £52bn, an increase of 6%. With the strongest activity being in the East Midlands, East of England and the South East. However, even though headline numbers are very positive, the residential sector is actually driving more activity in other planning stages.
On the contrary, the remaining two drivers of the recovery, the infrastructure and industrial sectors, turned out the best figures they’ve had in years. The infrastructure had its best year since 2013 with £21bn due to a strong renewable power generation pipeline and the industrial sector reached £16bn of applications.
2021 as a whole saw the construction industry recover, could this lead to 2022 full of growth?
AMA Research & Barbour ABI have specially created this annual review, from which this data was pulled, to give our audience the best chance of commercial success in 2022. Dive deeper into the story of 2021 to find the growth areas and trends in every sector and region your business is looking to target this year.