SOUTH EAST
As the energy sector focuses on scaling up renewable energy to support the government's 2030 clean energy action plan and broader 2050 net-zero targets, additional investment is required to address resource demands and grid connection deficiencies.
These challenges are expected to intensify over the next five years, with the industry’s goal of increasing clean energy’s share of electricity generation from approximately 58% to 95% by 2030.
Additional funding may be required to navigate planning challenges, secure necessary resources, and mitigate procurement obstacles, thereby reducing risk and accelerating development to enhance clean energy capacity and streamline connection applications.
MARKET CONDITIONS & PIPELINE
Developers and contractors exhibiting caution before committing to projects
Growth is expected throughout 2025 albeit with mixed trends and complexities across various subsectors in the South East. Two notably strong areas of growth are the residential and life sciences subsectors in Oxfordshire.
There are enough major schemes being announced to maintain some level of positivity despite difficult trading conditions and fundamental concerns regarding the speed at which key projects proceed through the development pipeline.
The recently re-announced Oxford-Cambridge Arc initiative could prove to be a significant boost for the region, along with the recent announcements regarding Heathrow Airport both in terms of a major capital investment programme and plans for a third runway.
There is plenty of market activity up to planning stage but then a level of caution as developers take stock of market conditions, viability assessments and exit strategies before proceeding to construction. There are some very big schemes that commercial developers have ‘on the shelf’ but they are wanting to see increased levels of demand before proceeding. There is still evidence of main contractors applying caution as to what schemes they commit resources to at tender stage.
RLB Market Activity Cycle
The RLB Market Activity Cycle is a representation of the development activity cycle for the construction industry.
RLB considers 10 sectors to be representative of the construction industry as a whole. Each sector is assessed as to which of three activity level zones – peak, mid or trough – best represents the current status of the sector within the cycle. This assessment is then refined by identifying whether the current status is in a growth phase or a decline phase.
The subjective current performance of sectors is identified by ascribing one of the coloured arrows (shown in the legend of the chart) to each sector. NB: In this analysis, sectors are not individually weighted.
▲ Peak Growth ▲ Mid Growth ▲ Trough Growth
▼ Peak Decline ▼ Mid Decline ▼ Trough Decline
Market sector activity analysis: South East
▲ Peak Growth ▲ Mid Growth ▲ Trough Growth
▼ Peak Decline ▼ Mid Decline ▼ Trough Decline
Consolidating the results of a region enables the calculation of a regional representation of percentage of sectors in each phase of the cycle at a point in time.
Market sector activity analysis: United Kingdom
▲ Peak Growth ▲ Mid Growth ▲ Trough Growth
▼ Peak Decline ▼ Mid Decline ▼ Trough Decline
Consolidating the results of multiple regions enables the calculation of a national representation of percentage of sectors in each phase of the cycle at a point in time.
TENDER PRICES
- Our tender price forecast for the South East for the next 12 months is predicting a rise of approximately 3.25%. Thereafter, we anticipate a continued uplift of around 3.5% per annum.
- While the ONS CPI remains stable, excess demand, geopolitical conditions, increased employment taxes and transportation challenges may introduce further pricing volatility.
- In light of current market conditions, investors and developers may consider procuring materials earlier in the project lifecycle. This approach could involve increasing risk provisions and adopting more agile procurement and delivery methods to enhance flexibility and efficiency.
Tender price change: South East
▉ RLB South East
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors (High) ▉ Competitors (Low)
INPUT COSTS
- Costs associated with MEP labour and materials are on the rise along with civil engineering costs.
- This trend is driven by heightened demand for electrical equipment and civils products, stemming from significant infrastructure, data centre projects and the expansion of energy projects across the UK.
- These factors are contributing to long lead times for electrical equipment and delays in grid connections.
SECTOR FOCUS
Data Centres
We are seeing increased levels of activity and interest outside what have typically been the core data centre hotspots in the region. This is in line with growth in demand across the sector generally.
Education
There are some key challenges in the higher education sector, in particular with issues around funding and fee levels. Much of the sector is currently focused on the challenge of upgrading an ageing estate to deal with backlog maintenance issues and decarbonisation targets. Accordingly, we are seeing capital investment programmes being reprioritised and scaled back in some instances.
Infrastructure
There are several large-scale programmes of work coming through the pipeline within the aviation and defence sectors, a number of which are being referred to as ‘once in a generation’ opportunities.
Residential
This sector continues to be impacted by issues such as interest rates, economic uncertainty, construction costs and sales values. There are still some ongoing examples of old commercial stock being earmarked for permitted development rights conversion schemes. From a housebuilding perspective, build-out activity has been subdued but recent announcements such as the £300m funding for the Affordable Homes Programme may provide a positive boost.
ELTHAM, UK
University of Greenwich
RLB is providing the University of Greenwich with commercial support for a major refurbishment of student accommodation. The project involves the upgrade and reconfiguration of the existing student residential facilities at Boleyn Court on the Avery Hill Campus, Eltham.
The building is composed of three floors with a broadly replicated stacked layout. There are 39 self-contained flats with 166 bedrooms, with the 13 flats on each floor served by seven common stair cores.
The project, which includes a full electrical re-wire to provide data services, will be conducted in two phases:
- Phase 1 – Full strip-out
- Phase 2 – Renovation and fit-out of the interiors of each bedroom to meet current student expectations for residential accommodation, and an upgrade of communal facilities within each flat including kitchen/dining areas, WCs and shower rooms.
Data and analysis compiled by:
