The construction industry has been gripped with spiralling costs in materials and labour, and now faces further new challenges in the cost of developing land for new housing. Colchester-based Horizon Construction Group recently welcomed over 70 senior practitioners from across the region to its Construction and Property Breakfast event to discuss the ‘big issues’.
The main feature of the event was a discussion with a group of local property professionals. The panel of experts included planning consultant, Robert Pomery from Pomery Planning Consultants, chartered surveyor, Peter Riches from Morley Riches & Ablewhite, and commercial property solicitor, Bethan Williams from Ellisons Solicitors.
The overriding theme of the questions raised with the panel was the continuing rise of costs involved in development. Combined with the ‘cost of living crisis’ and volatility in the economy, the construction industry has been plagued by not just the pandemic but also spiralling costs for some time. The cost (and availability) of construction materials have dramatically risen over recent years, causing huge implications for the solvency of firms and the pricing and continuation of construction projects.
Horizon Construction was delighted to host its event at a time when the region’s industry needs to work more closely together to secure mutual interests. Even with some encouraging trends that construction material prices are becoming more stable, prices remain high and uncertainty is once again rising.
Managing Director at Horizon Construction Group, Phil Holding, said: “Our event brought together some of the leading figures in our region’s construction industry. It was an opportunity to have honest and open discussions about how we are dealing with the big issues in our industry. Needless to say, we are all grappled with an emerging crisis in construction, both at a micro and macro level in the industry, amidst expectations on building quotas, sustainable living and affordable housing.”
The growth of the construction industry relies on confidence in investment from the public and private sectors. Some of the current influencing factors in investment decisions now include the growing cost of construction, increasing interest rates and inflation, and government and local authority requirements in building requirements and regulations.
Developers are finding it increasingly challenging to achieve certainty in their projects from an early stage. The cost of developing land is becoming more prohibitive following the imposition, and sometimes the inflexibility, of requirements and availability of resources.
Phil Holding comments: “The cost involved with developing land was not such a big factor for developers as it is now. For example, just the requirements for sustainable drainage and energy efficiency are having a massive impact before the building process has even begun. Electrical car charging points on new housing require significant involvement and support from UK Power Networks. Currently, supply can’t meet demand, and any requirement of new substations for new developments comes with a significant cost to developers, as well as potential delays in the project, and even unviability altogether.”
The panel emphasised the importance of a comprehensive level of due diligence in projects at the earliest opportunity. There is also an urgent need for local and central government to provide more support to smaller developers to better understand and overcome the complexities of the latest planning reforms. Likely consequences of further rises in the cost of construction are less housing, higher house prices and fewer affordable housing schemes.
Phil concludes: “It’s now essential for developers to involve trusted construction partners at the initial design and planning stage to help reduce the risks in their projects, as well as to deliver the best solutions, drive innovation, identify efficiencies and ultimately, provide much-needed confidence.
This article was published in ‘Construction East‘, a publication for Eastern Daily Press and East Anglian Daily Times, BusinessTime in Essex, and Grapevine Magazine, a publication by Essex Chambers of Commerce.
The Construction and Property Breakfast on 13 October 2022 at The Barn, Great Tey, Colchester.
Published articles in Construction East, Autumn Edition, 26 October 2022, and BusinessTime in Essex, Winter Edition 2022.