SCOTTISH construction activity fell in the first quarter of 2024 according to the latest Royal Institution of Chartered Surveyors (RICS) Construction Monitor.
The research found surveyors remain ‘cautious’ about the outlook, anticipating workloads will remain flat.
A net balance of -20% of surveyors in Scotland saw a fall in overall construction workloads through Q1 2024. This is the lowest balance seen across the UK.
Infrastructure was the only sub-sector to see an uplift with a net balance of 6% of surveyors noting a rise. The net balances of the rest of the sub-sectors were all reported to have fallen: public housing (-15%), private housing (-37%), private commercial (-6%), private industrials (-22%) and other public works (-26%).
Profit margins are expected to remain squeezed over the next year. A net balance of -19% of surveyors in Scotland report they expect profit margins to decrease over the next 12-month period.
Surveyors also continue to report shortages in skilled workers. 55% of respondents noted a shortage in quantity surveyors, though this was an improvement from 65% last time. 52% noted a shortage in other construction professionals, up from 46% the previous quarter, while 45% reported a shortage in bricklayers, up from 39%.
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 QS Ltd, in Glasgow added, “The 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.”
Commenting on the UK picture, Simon Rubinsohn, chief economist at RICS, said, “The results of the Q1 RICS Construction 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. Alongside this, 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.”
