With the New Year just weeks away, here Des Duddy, the joint managing director at Protrade, gives his six predictions for what 2022 has to offer for the construction industry.
All that has been spoken about for big chunks of 2021 has been the supply chain issues, rising material costs, and labour shortages – three notable challenges the construction industry (as well as many other sectors) has faced since the start of the Covid-19 pandemic and the introduction of Brexit.
Businesses up and down the UK have had to pivot and adapt how they operate like never before. Leaders across a range of different sectors deserve to be recognised for how they have managed unparalleled circumstances.
We, here at Protrade, have been no different. The traditional methods that have been part of our operational make-up for decades have had to change. We’ve learned on our feet as we have gone along, hoping the decisions and changes we make pay off.
Speaking specifically about the construction industry, all we have known for the past 18 months has been disruption. However, as the end of the year approaches, it feels like we’re as close as we have been for a long time to getting back to where we were pre-pandemic.
I referenced in an article earlier this year that construction won’t see a complete recovery back to pre-crisis 2019 levels until 2023. In-line with that prediction, the past 12 months have been about finding our feet and now 2022 is going to be the year that construction begins to climb back to them.
Here are six predictions for what is in store for our industry during 2022…
1) Demand and price of raw materials will increase further
Earlier in November, the US Senate passed a historic infrastructure bill, worth an estimated $1.2trn, to rebuild the nation’s deteriorating roads and bridges and fund new climate resilience and broadband initiatives.
It’s a substantial bill, one built to stimulate the economy. On the flipside, though, it has created a big demand for labour and raw material – a demand that, likely, cannot be met by the current supply issues.
What this bill will also do is inflate the prices of raw materials even further than the 20% average we have experienced during 2021, as projects all over the world contest and haggle over products.
Factories producing raw materials and products are turning their attention to this American bill because they know they can get money from the market, creating an attitude that no price is too high.
We’re operating in a seller’s market and that will become more and more apparent during 2022.
2) The importance of off-site manufacturing will grow as we become more efficient
Modern Methods of Construction – otherwise known as MMC – is one area of construction and manufacturing that has enjoyed accelerated growth, as a direct result not only of the Covid-19 pandemic, but also the supply issues I highlighted in the first point.
Earlier this year, it was predicted by Savills, one of the biggest retail estate agents in the UK, that the proportion of new homes built using MMC would increase from the current 6-10% to 20% of the market share in the coming years.
That said, in order to meet the UK’s housing delivery target that figure needs to increase further still. There is an argument that, with how the market is shifting, businesses operating in construction need to be working more efficiently. Off-site MMC provides that solution, as well as much more accountability and cost control.
There is enormous investment going into it in the UK – the reasons being commercial gain, the fact it gives companies a competitive edge and helps them meet demand. The only issue with modular construction is that it has a tarred reputation from the old days when it acted as temporary accommodation. However, off-site manufacturing techniques have progressed significantly over the last few years, with buildings now being produced to incredibly high and repeatable standards.
Remember the hospital that was built in Wuhan in 10 days or the 57-storey building erected in China in just 19 days? We’re going to be seeing far more examples of projects like these in the near future.
3) Delayed projects will return and start in 2022
There have been many projects that have had to be mothballed and kicked into the long grass during 2020 and 2021.
In 2020 alone, it was estimated that over 4,500 construction projects were put on hold in the UK. Combined, those projects – made up mostly of housing schemes – were worth £70bn.
What we know is that the construction industry is crucial to the recovery of the UK economy. The need to get severely delayed projects underway is imperative during 2022, to ensure there is no impact on the wider economy.
This ties back to the first two points. There is a battle right now for raw materials, while off-site MMC will play a bigger part in housing developments moving forward, especially off the back of the Homes England programme, which is aiming to make a quarter of affordable homes from MMC.
4) There will be a wave of new conversion projects for vacated office spaces
There are two reasons for this.
Firstly, remote working is not going away. Millions of businesses are adopting flexible hybrid working, offering colleagues the opportunity to choose where they work, whether it be from home or from an office. Some have gone remote entirely.
The other reason, sadly, is because of the number of high street businesses that we have lost as a result of the pandemic and changing shopping habits, with the UK seeing the biggest rise in vacant shops in over two decades late last year and the sharpest increase in empty offices since the financial crisis. The Royal Institution of Chartered Surveyors (RICS) said its quarterly commercial property survey showed a swing in demand towards industrial space.
What remains is a large number of vacant offices and retail premises in desperate need of attention, and I believe we will see a conversion of this type of redundant space into residential accommodation.
The volume will only increase as leases that large organisations hold come to an end. There will be a lot of empty office blocks all over the country, so a big focus for 2022 is likely to be the refurbishment of those office blocks into residential communities to support the ongoing housing crisis.
5) Radical town planning is on the horizon
Due to the rise in investment in EV, town planning is going to undergo a significant shift – with a lot of those plans and discussions taking place during 2022.
As I alluded to, off-site manufacturing has the capability to erect a 57-storey building up in 19 days. Using that example, if there are four apartments per floor, that’ll cater for a few hundred people.
As we edge closer towards EV becoming more prevalent, the question remains how those who own vehicles are going to be accommodated in our town centres and those living in the vicinity of them.
There’s a lot of people in the UK that are lucky to have off-road parking, but that isn’t the case for everyone, especially for those that live in built-up areas, close to city centres, where apartment blocks and rows of terraced houses are prevalent.
It doesn’t make sense to have a 200-ft extension lead hanging out of your window all the time, so is communal charging the answer? At that point, who determines who has access to that charging point and for how long? Who determines whose need is greater? These questions are going to force town planning to change because if there is nowhere to park EVs and charge them, it’ll make things difficult.
We’re going to see towns shaped around charging vehicles and with the Government’s legislation to end the sale of new petrol and diesel cars to end in the UK by 2030, there’s still a significant amount of infrastructure work that needs to take place.
6) The UKCA Marking issue will need resolving
Since leaving the EU, the UK has needed to start considering the latest quality standards.
Due to Brexit, the old CE mark manufacturers have used for years has been replaced by the new UKCA mark, which needs to be applied to goods placed into the UK market.
For context, we import certain fasteners that require, by law, accredited performance criteria. Unfortunately, though, there is no UK test house currently in existence to carry out the necessary testing or conversion of current CE standards.
At this point, the Government has deferred obligatory UKCA marking until January 2023, although we believe a year may not be long enough to tick all the required boxes. I believe the UK’s strict building standards are a good thing, as we can showcase the completion of numerous high-quality projects.
In order to continue meeting those standards, 2022 will be a busy year to pull all this together in readiness for the January 2023 deadline.
Watch this space, as they say!
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