The RIBA Business Benchmarking 2023 report finds that RIBA chartered practices collectively generated £3.6bn revenues in the year to 1st May 2023, a 17% increase on the previous year.
Profits were also slightly up, by 2%, despite high inflation pushing up overheads and salaries and shaving margins.
Revenue has increased across work sectors, with a 28% increase in private housing, a 25% increase in the commercial sector, a 25% increase in health, education and public sector work and a 22% increase in mixed or alternative sector work.
While small and medium practices performed particularly well, the report says, much of this year’s growth comes from large practices (100+ staff), which have increased their share of the market from 41% in 2022 to 45% in 2023.
There has been a 43% increase in international work, with work in Europe especially strong, followed by North America. Large practices (100+ staff) have tended to look outside the UK for their growth and are responsible for 86% of international revenue.
Looking ahead, practices predict that revenue will grow by 5% this year, but expenditure is predicted to rise by even more, 6%, so the squeeze on profits looks set to continue.
Findings show that practices employ around 38,000 staff – a slightly lower figure than last year – of whom 60% are male and 40% female, compared to a 62/38 split in 2022 and 63/37 in 2021.
Ethnic diversity is changing at a similar rate. Findings indicate that 84% of staff are white (81.7% of the population of England and Wales are white according to 2021 Census data) compared to 85% last year and 87% the previous year.
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RIBA head of economic research and analysis Adrian Malleson said: “This year’s findings show a remarkable recovery. Despite the challenges faced since 2020, UK practices have once again proved to be resilient, adaptable, and innovative.
“After two years of reduced income, total practice revenue has risen sharply. There has been growth across almost all sectors, prompted in part by the post-pandemic domestic ‘race for space’. And the profession continues to lead the way in the design and creation of safe, sustainable, and prosperous villages, towns, and cities.
“Overseas work has increased dramatically – and Brexit doesn’t appear to be holding UK architects back from growing their commissions across the Channel, with the biggest leap in overseas work coming from the EU.
“This growth in overseas work isn’t just an economic success story, it’s also testament to the profession’s global reach, its ability to adapt to different places and people, and to produce building design that resonates around the world. Architecture continues to contribute to one of the UK’s enduring successes – its creative industries.
“In the face of adversity, architects have once again displayed remarkable resilience, navigating external difficulties, including the pandemic, product scarcity and high inflation. The latter has taken its toll over the past year - while revenue has skyrocketed, profits have increased only marginally.
“We are not yet out of the woods. Practices still face high inflation, causing overheads to rise and eat away at profits. Increased interest rates make project financing more expensive and difficult to obtain for potential clients. The planning system is holding back and even halting projects, and the stagnant general economy weighs on client demand.
“But even against this grey backdrop, practices are not gloomy about their prospects. For the first time, this year’s report gives information about expectations for the coming year. In 2023/24, on balance, revenue is expected to rise, and more staff are expected to join practice. Innovation continues, as the profession embraces new ways of working, emerging technology and working in new sectors as routes to increased profitability.”
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