Scottish surveyors cautious about construction outlook after output falters

Releasing its latest construction monitor, the Royal Institution of Chartered Surveyors (RICS) said reduced workloads through the first three months of 2024 appeared to be weighing on Scottish surveyors’ outlook. Profit margins are expected to remain squeezed over the coming months, it noted.

A net balance of -20 per cent of surveyors in Scotland saw a fall in overall construction workloads through the first quarter. This is the lowest balance seen across the UK.

Looking at sub-sectors, infrastructure was the only one to see an uplift with a net balance of +6 per cent of surveyors noting a rise. The net balances of the rest of the sub-sectors were all reported to have fallen: public housing (-15 per cent), private housing (-37 per cent), private commercial (-6 per cent), private industrials (-22 per cent) and other public works (-26 per cent).

Scottish surveyors continue to report shortages in skilled workers. Some 55 per cent of survey respondents pointed to a shortage in quantity surveyors, though this was an improvement from 65 per cent in the previous survey. Meanwhile, 52 per cent of respondents noted a shortage in other construction professionals, up from 46 per cent the previous quarter, and 45 per cent reported a shortage in bricklayers, up from 39 per cent in the last survey.

Simon Rubinsohn, chief economist at RICS, said: “The results of the monitor suggest that activity in the industry more broadly is likely to start picking up as the year progresses although, for the time being, it remains the infrastructure sector where sentiment remains most positive. The more upbeat expectations for the residential segment is particularly encouraging given the sharp fall in supply over the last year or so but, to put this in some context, the latest reading is not indicative of a return to even previous development numbers let alone reaching the goal of 300,000 units per annum.

“Although there is a little more optimism about a likely easing in credit conditions towards the back end of this year, financial constraints currently continue to be perceived as the major challenge facing the industry.”

David Shaw of Torridon Cost Consultancy in Edinburgh said: “Public sector spending cuts have sharpened supply chain focus on securing work, with tender prices remaining stable. Sustainable refurbishment is gaining momentum, driven by increased awareness and future regulation, bringing challenges in sourcing and upskilling the supply chain to meet this demand.”

Ian Differ of CBA Quantity Surveyors in Glasgow pointed to a combination of increased construction costs over the last two to three years, together with higher financing charges and rental income lagging behind inflation. “The market needs to re-balance,” he noted.

Rubinsohn added: “Securing planning is also seen as a key obstacle to getting on site while even with the relatively subdued trend in activity, difficulties in sourcing sufficient quantities of skilled labour are still being highlighted.”

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