UK’s property sector recovery could spur British expats to return home

Construction in Britain is firmly back on a growth track as output in December was 2 per cent higher than it was a month earlier. Above, a builder assembles wooden roofing joists on a new home in Bedford. Chris Ratcliffe / Bloomberg News

From the sub-prime to the ridiculous, the United Kingdom’s property market has gone from the doldrums to dramatic heights in what seems like a matter of months.

And the rebound could affect construction in the Middle East as demand for skilled workers in the UK industry rockets, which may spur many British expats to consider returning home.

As a mark of how quickly the all-important sector is recovering, the UK brick maker Hanson has even reopened a factory in the north-west of England that was mothballed five years ago, because of a shortage of bricks.

And the Royal Institution of Chartered Surveyors (Rics) has blamed a shortage of bricks and bricklayers for temporarily holding back the sector when, in November, output figures took an unexpected dip.

That could have a longer-term impact on the Arabian Gulf region. It is not just bricks and bricklayers the UK construction industry is lacking – it is construction professionals at every level of the industry.

According to the industry’s skills organisation, the Construction Industry Training Board, 182,000 jobs will be created in British construction in the next five years. That could mean workers who headed overseas when the outlook was bleak, including many who came to the Gulf, may decide it is time to head home.

“Recent years have been tough for house builders in the UK, and the crash of 2007/08 saw the industry shed around 40 per cent of its workforce,” says Stewart Baseley, the executive chairman of the Home Builders Federation, which represents the leading house-building companies.

“However, with an improving economy and greater demand for new homes driven by the [government’s] help to buy scheme, allied to more land coming through the planning system, output is finally increasing,” he says.

“As a result, builders are looking to recruit across the board. Clearly this is providing opportunities for expat workers with experience of working in the UK.”

And certainly, the work is there to be had. Despite the November wobble, construction in Britain is firmly back on a growth track, according to the latest official figures.

Output in December was 2 per cent higher than it was in November and 6.3 per cent higher than it was in December the previous year.

Strong growth in new homes are underpinning the sector’s turnaround.

At the same time, house prices are reaching new highs and are expected to carry on growing throughout this year. According to figures release by the UK’s office for national statistics (ONS) last week, the average value of a house in the UK has now hit £250,000 (Dh1.52) – in London it is a whopping £420,000.

House prices in December, the ONS said, were 5.5 per cent higher than they were a year previously, propelled by a 12.3 per cent increase in house prices in London.

Government schemes to help to stimulate new house-building appear to have worked, with the number of new homes being built up more than 10 per cent on the previous year – a figure that is higher than in any of the past six years, according to the UK treasury.

The resulting demand for skilled labour may well be felt in the UAE, where the construction market continues to expand and the authorities have already committed to spend US$7.6bn on the Dubai Metro and another $3.26bn on several major road projects.

Trefor Murphy, the managing director of the recruiter Morgan McKinley UAE, says he expects demand for business development, tendering and quantity surveying professionals in the Emirates to intensify over the coming months.

This month, Arabtec Holding, the engineering and construction group that is building Abu Dhabi's Louvre Museum among other major projects, said it would need to fill 10,000 jobs in the region, having already hired 3,000 new recruitslast year.

With that level of demand for skilled construction professionals continuing in the region, construction bosses will be pleased to hear that so far British construction companies, including Skanska and Carillion, are yet to see a rush of applications for jobs in their home markets, which perhaps underlines the uncertainty many still feel about the UK economy.

It is fair to say the UK industry is not wholly confident of its own recovery and would like to see more support for infrastructure projects. At present all the growth seems to be coming from the house building sector.

“Clarity and certainty of future projects is an important element of a sustained recovery. That gives employers the confidence to train and to plan,” says James Wates, the chairman of the UK Construction Industry Training Board.

“Our latest skills report shows that the economy is turning the corner and the UK construction industry will benefit from that. But growth needs to be sustainable; underpinned by long-term infrastructure projects and continued investment.”

Infrastructure is set to have the second-largest impact on growth behind home building, with average annual growth of 3.6 per cent, followed by industrial at 3 per cent and public housing at 2.2 per cent.

The knock-on effect is set to be a spike in demand for new workers which, if not met, could lead to skills shortages in some occupations.

Most sought after will be plant mechanics, followed by civil engineers and construction process managers.

Planned new nuclear builds will see the UK experience the biggest increase in demand for scaffolders for four years, industry insiders say

According to Simon Hay, the chief executive of the Brick Development Association, the largest constraint to industry recovery continues to be the shortage of public-sector construction.

“The lack of investment in public-sector projects is what is really affecting the industry – not a shortage of bricks,” Mr Hay says.

This optimism is reflected in the forecasts for the property sector, both residential and commercial.

Experts are predicting an 8 per cent increase in house prices, sparking fears of an unsustainable housing bubble. In the commercial sector, the surveying firm Jones Lang LaSalle anticipates demand for new offices will also pick-up, even beyond the hotspots of the London market.

For the past five years, developers and lenders have been understandably cautious about building offices speculatively – without a tenant prepared to take a lease. That means when demand does pick up there will be a shortage of available space, exacerbated by the lackof construction labour and supply-chain problems which the industry is seeing.

“As demand recovers throughout 2014, the shortage of Grade A space in particular will become more acute,” Jones Lang LaSalle forecasts.

That is likely to lead to increasing rents, as is already being seen in the trendier parts of East London and also in refurbishments of commercial buildings in an attempt to deliver offices quickly into a market starved of new space.

The weight of international capital seeking a home in the London market – particularly from China and South-East Asia, but also from Gulf states including Qatar – will continue to fuel both commercial property development and the prime residential markets in London, according to estate agents.