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Rail, shops and offices will be next year’s bright spots, says economist

13 Dec 10 A lousy autumn for the construction industry saw the value of projects starting on site fall 14% in the three months to November, compared with the same period last year, according to an industry analysis. Some sector are set to rise in 2011, though.

The slowdown comes after an apparent recovery in UK construction earlier in the year. According to the contract leads publisher, Glenigan, project starts in government funded sectors, private housing and even retail all fell.

However, Glenigan’s economics director, Allan Wilen, believes that a corner has been turned and the need for new offices and refurbished shops will drive building demand in 2011, while civil engineering will benefit from the rail sector.
"The major supermarkets have led retail project growth this year and this is set to continue in 2011,” Wilen said. “Retailers and landlords are also expected to increasingly refurbish premises to increase consumer footfall and spending. Major new shopping centre projects will take longer to emerge, although work is continuing on Westfield's Stratford City project and work has restarted on the Trinity Quarter scheme in Leeds."
He added: "New office projects fell sharply during the recession and hence little new floor space has come onto the market. In central London demand, capital and rental values have been rising and the shortage of quality office space will worsen as the economy recovers. Developers have been revisiting planned schemes and project starts are forecast to rise in 2011. Developers such as Land Securities are already pressing ahead with major projects such as the £500m 'Walkie-Talkie' building in the City of London." 
Wilen said that while the Department for Transport's capital budget over the next five years will be roughly the same as the last five, a greater proportion would be taken by rail rather than roads in the years ahead, with numerous projects to improve the network, including Crossrail and Thameslink.

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