Read the Latest News on Scottish Housing Outperforms as Uk Values Stabilise, Offsite Construction Pioneer Merit Reports Growth, Building Lifts Can Reach Birmingham’s Town Hall and as Rivals Fail, Kier and Costain Thrive

In today’s UK construction news, we will look into the latest. Despite the stabilisation of values in the United Kingdom, Scotland’s housing market continues to operate exceptionally well. Additionally, Merit, a pioneering offsite construction provider, has confirmed that they have experienced tremendous growth. Furthermore, these construction lifts are capable of reaching heights that are greater than the Town Hall in Birmingham. Furthermore, how Kier and Costain are succeeding while their competitors are failing.

Scottish Housing Outperforms as UK Values Stabilise, says Savills

Original Source: Savills: Scotland’s housing sector outperforms as UK values stabilise

According to Savills, the UK’s total home worth is £8.678 trillion, with Scotland outperforming the rest of the UK by 1.3%.

Savills Scotland head of residential research Faisal Choudhry said: “Scotland’s housing sector remains robust and resilient, with housing stock value rising despite a marginal drop in UK stock.

Scottish growth is driven by comparative affordability, the value differential between Scottish and southern locales, which allows for additional growth. Property investors from throughout the UK continue to flock to Scotland.

Despite falling somewhat from 2022, the UK’s housing stock is £1.585tn larger than before the epidemic (2019).

“Despite higher mortgage costs, the market’s resilience means UK housing remains a significant and secure wealth store. Lucian Cook, head of residential research at Savills, said net housing worth exceeded £7tn, 2.6 times the UK economy, even after deducting £1.652tn in mortgage debt.

“New housing delivery added £80 billion to the total value in 2023. However, stricter mortgage regulation, the rise in fixed-rate mortgages, and lender aid to financially troubled borrowers shielded the market from interest rate pressures.

We may see mortgage prices fluctuate in 2024 as markets react to changing predictions of when and how much the Bank of England will decrease the base rate. We expect affordability pressure to lessen over the medium term, therefore the current value drop should be temporary.”

Though mild, Savills reported value drops in the south. Housing stock in London fell by -£39.3bn (-2.1%), whereas the South East, South West, and East of England fell by -£16.5bn (-0.5%).

Further from London, markets with more growth potential saw valuations rise year-over-year. The biggest increases were in Northern Ireland (3.2%), North East (1.4%), Scotland (1.3%), and East Midlands (1.3%).

London represents the majority of UK housing value, however it has only contributed 12.01% of growth since 2016. Due to this, its share of UK housing value fell from 24% in 2016 to 21% in 2023.

“A geographical rebalancing of the UK housing market will continue in 2023,” Mr. Cook said. Most healthy regional markets were those where mortgaged buyers borrowed less than their income, as expected at this time in the cycle.

Outright owners benefit most from value increase. Homeownership accounts for approximately 40% of UK housing value, according to Savills.

The data shows that mortgage-free owner occupiers’ property value has soared by £1.505tn (£1,505bn) over the previous decade, whereas mortgaged owners’ has increased by £978bn.

The value of unmortgaged and mortgaged owner-occupied homes was similar in 2013. The difference between the two has grown significantly in the last decade due to demographic shifts and house ownership changes, said Mr. Cook.

We saw more people who benefited from the late-20th century homeownership boom becoming mortgage-free in 2023. Last year, hopeful homeowners faced high deposit requirements and rising mortgage costs.

“Despite rising tenant demand, increased taxation and regulation have constrained supply in the private rented sector housing,” Mr. Cook said.

Offsite Construction Pioneer Merit Reports Tremendous Growth.

Original Source: Pioneering offsite construction specialist Merit confirms significant growth

Northumberland-based Merit, the UK’s largest industrialised construction and digital manufacturing company, saw consolidated revenues rise 46% to £88.4m.

Merit’s achievement has several causes. First, a patented platform design and 71.9% productivity growth between 2016 and 2022.

Merit expanded its offsite approach in 2023 with a 44,000 sq ft extension at its Cramlington factory, one of the UK’s largest construction production sites at 263,000ft2. June 2023 saw the enlarged high-bay facility open.

Merit invests roughly £5m in new intellectual property in R&D to improve its products. Advanced technology and software make the organisation a digital manufacturing leader.

Merit’s pioneering approach to offsite construction and digitalized manufacturing of technically challenging buildings with a Pre-Manufactured Value (PMV) of 75%–95% supports its better financial performance. The company can provide fixed-cost, sustainable, high-quality, bespoke-specification buildings to clients in a third of the time using these methods.

Merit CEO Tony Wells said: “We are thrilled to report another year of positive financial results, which continues our long-term growth strategy. Our automated and digital-led strategy builds complex, high-quality buildings three times faster than traditional alternatives, demonstrating our dedication to excellence and innovation.

Our product platform designs are delivering actual, tangible growth and promise higher performance, quality, reliability, and 60 years of longevity than traditional construction. Net Zero remains a key motivator and subject of significant R&D investment in 2024.”

Our parametric cost modelling provides real-time cost feedback during design development for inexpensive fixed-price cost certainty, unique in construction. Merit’s goals for the year include increasing industrial automation for productivity and launching our V7 platform.

Berwick’s 10,500m2, £35m community hospital, Solihull Hospital’s Elective Hub (Operating Theatre Block), and Northumbria Healthcare NHS Foundation Trust’s sterilisation services and decontamination supercentre are recent initiatives. A 2000m2 multi-million-pound therapy-led facility for Norwich Community Hospital is planned to be completed in five months by Merit.

Building Lifts can Reach Birmingham’s Town Hall

Original Source: These construction lifts can reach higher than Birmingham’s Town Hall

Hire Safe Solutions has Dingli machinery for large-scale construction.

The UK’s construction industry is growing tenfold in industrial, residential, energy and utilities, IT infrastructure, and other sectors.

Over the past few years, high-rise office complexes, flats, and other commercial establishments have increased in the country.

The city of Birmingham has around 312 high-rise buildings above 30 metres tall. The BT Tower, at 152 metres, is the tallest.

As our city has more rising buildings, the need for reliable, high-quality equipment that promotes efficiency and worker safety rises.

Hire Safe Solutions has extensive expertise delivering mechanical-powered access solutions for high-rise construction teams.

It strives to provide excellent customer service and stock a variety of equipment to transform the UK construction industry.

The Dingli 2212DC, BA28RT, 3225RT, and 3214DC lifts are among the company’s most popular. They can run on electric/battery or diesel power and have different maximum heights and safe working loads, so firms can choose the right equipment for their project.

These lifts may not reach skyscraper levels, but they can help construction companies develop outstanding public and private structures in our city’s diverse and ever-changing surroundings.

Dingli 2212DC Scissor Lift can reach 22 metres, taller than Birmingham’s Town Hall.

Its 600 kg lifting capacity, 1.25m width, and 4×4 steering make it easy to handle in tight areas. It can travel at full height and has a pure electric motor with no noise or emissions, making it ideal for sensitive flooring and quiet indoor situations.

However, the Dingli 3225RT and Dingli 3214DC versions can work at 32 metres, equivalent to seven double-decker buses.

The Dingli 3214DC is ideal for working in clean air zones like Birmingham city centre because it’s totally electric. It works well in warehouses, power plants, and tunnels.

Construction teams looking to handle unprecedented heights may benefit from the Dingli BA28RT Articulated Cherry Picker. It can stand at 28.1 metres, almost as tall as three Birmingham ‘Raging Bull’ versions assembled.

Any Hire Safe Solutions Dingli lift can be leased, hired, or bought. The company might also suggest a machine-safety training course for staff.

As Rivals Fail, Kier and Costain Thrive

Original Source: How Kier and Costain are thriving as rivals fail

More construction companies failed last year than any other sector for the third year in a row, yet most major listed contractors thrived.

Mazars’ study of Insolvency Service data found 4,370 construction companies insolvent in the year ended November 2023, 17% of all UK corporate insolvencies. There are now on average a dozen building enterprises going under every single day in the UK’, the firm’s restructuring services partner Mark Boughey said. Federation of Master Builders: Small and medium-sized contractors reported 15% lower workloads and almost half fewer new enquiries last year.

Top contractors are thriving, with most listed operators posting share price gains that exceeded the market.

Over the past year, Kier (KIE) shares have risen 82%. Costain (COST) shares rose 55%, Galliford Try (GFRD) 47%, and Morgan Sindall (MGNS) 31%. Only Balfour Beatty (BBY) has lagged, with shares down 8%. Investor fears about a deteriorating US construction industry and HS2 cancellations were cited by Jefferies analysts.

Most listed contractors have benefited from their lack of exposure to the UK’s dying residential new-build sector. Private home output fell 19% last year and is expected to fall 4% this year, according to the Construction Products Association.

Over the past decade, Kier, Costain, and Balfour Beatty have focused more on significant infrastructure projects domestically. After Carillion and Interserve high-profile failures in 2018 and 2019, this area is less congested and contract terms are more industry-friendly. It is usually done on a ‘cost-plus’ or target cost basis, so contractors don’t risk huge losses on fixed-price, multi-year projects if materials or labour prices rise.

“You’ve got arguably less of the more ill-disciplined players left because the likes of Carillion have gone bust and the ones that remain are just managing that whole risk, contract appraisal and bidding process a lot better,” said Investec analyst Aynsley Lammin.

According to Balfour Beatty’s latest annual report, only 10% of UK construction work is fixed-price, down from 50% in 2018.

Smaller firms can’t afford this, and Boughey said risk is typically “passed down the supply chain” to tier two and tier three suppliers through fixed-price contracts.

He continued, “They don’t seem to have much bargaining power with the main contractors.”

Solid foundations

Balance sheet strengthening has also helped listed contractors rerate.

Before the pandemic, Kier had two rights offerings between 2018 and 2021, generating approximately £500mn and selling non-core companies to survive.

Investors fled, and it took two years of improved trading and debt reduction to entice them back. Average monthly net debt declined from £582mn in 2021 to £232mn last year, and the corporation announced a £250mn bond issuance this week to repay its debt. The five-year notes had a 9% interest rate and a BB+ Fitch grade. The ratings agency reported that 60% of Kier’s contracts include pass-through clauses to recover costs.

Costain had to perform a £100mn rights offering in March 2020 during the pandemic, when revenue and earnings plummeted. It also had to reestablish trust—when we highlighted the company in our ideas section in September 2022, its shares were so lowly rated that it was barely worth half its net assets. Their valuation is six times expected earnings despite their recent upgrading.

Summary of today’s construction news

Overall, we discussed how the Scots outperformed the rest of the UK by 1.3% when it came to the total home worth of £8,678 trillion, according to Savills. The value disparity between southern and Scottish locations enables extra expansion, which is driven by comparative affordability. Investors from all around the United Kingdom keep coming to Scotland to buy property. However, consolidated revenues for Northumberland-based Merit, the biggest industrialised construction and digital manufacturing company in the UK, increased 46% to £88.4m. In 2023, Merit added 44,000 square feet to its Cramlington plant, making it one of the biggest construction production sites in the UK at 263,000 square feet. This allowed the company to further develop its offsite approach. The expanded high-bay facility was opened in June 2023. In addition, the construction business in the UK is experiencing exponential growth across various sectors, including residential, energy and utilities, IT infrastructure, and industrial.

A growing number of apartment buildings, office complexes, and other types of commercial buildings have sprung up around the nation in recent years. The demand for dependable, high-quality machinery that boosts productivity and worker safety is growing in tandem with the city’s skyscrapers. Also, for the third year running, the construction industry had the highest number of company failures, while the majority of the major listed contractors did quite well. Listed operators, including top contractors, have seen share price rises that have outpaced the market. The listed contractors have mostly profited because they have avoided the crumbling home new-build market in the UK. Production of single-family homes dropped 19% in 2017 and is projected to drop 4% in 2018, according to the Construction Products Association.

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