As the demand for space to build increases, the construction sector is being forced to shift its attention to new areas of development, and according to new research, it’s the refurbishment and fit-out business that’s reaping the rewards.
A booming refurbishment market
AMA’s Interior Refurbishment and Fit-Out Market Report – UK 2014-2018 estimated that the refurbishment and fit-out market was worth £7bn in 2013. The seventh edition of the report, the Interior Refurbishment and Fit-Out Market Report – UK 2018-2022, estimates the market has increased by 34pc since 2013 to over £10bn. A significant increase, and London’s contractors are reaping the rewards of that growth.
At its current rate, the market is growing by around 2 to 3% a year. A conservative estimate for 2022 is for it to be worth £18bn.
The conclusions of AMA’s report show that new building projects are declining while refurbishment projects are increasing steadily. This is based on activities of main contractors in the UK construction sector.
Another report by Statista has analysed the office space under development and refurbishment on the London West End from 2017 to 2021. This year, it shows that there’s over 60,000 more refurbishment projects than development projects; a huge difference, although it evens out over time.
Making the most of available space
If new plots are unavailable, existing buildings have to be refurbished.
London is a huge city, and the most populous in England. The estimated population of Greater London in 2016 was 8,787,892 according to the Office for National Statistics. By 2020, the population of London is estimated to reach 11 million.
The development of existing buildings through refurbishment and fit-outs is absolutely necessary to keep pace with consumer and market demands. Shops, office space, schools, museums, hospitals are all candidates for consideration.
It’s also important to note that reductions in government capital spending in education and healthcare mean it has become impossible for these institutions to spend on new build development. Lower cost remodelling, refurbishment and fit-outs are now the solution to cater to a growing population and increased demand.
Looking ahead for the refurbishment and fit-out sector, we can see more construction companies shifting towards a new business model where these lower cost, usually faster turnaround, refurbishment projects are delivered in volume.
With growing uncertainty surrounding the UK economy following Brexit, capital investment in new-build developments has slowed. As a result, it is likely that the construction market will see a continued buoyancy in the UK refurbishment sector.