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CONSTRUCTIONINDUSTRY FORECASTFOR THE UK AND REPUBLIC OF IRELAND2025-2026NOVEMBER 2024Featuring insight directly from industry thought leaders:Bloomberg IntelligenceBUSINESS INTELLIGENCE FOR THE UK CONSTRUCTION INDUSTRYThe UK construction industry is facing a complex future,with a mixed outlook for recovery.Construction businesses need to be able to make informed decisions quickly and efficiently to navigate this complexity.Glenigan Analytix is a business intelligence platform that provides construction businesses with the insights they need to succeed.Our platform integrates data from planning applications,main contract awards,and start on-site to deliver a self-serve business intelligence environment that empowers users to interrogate and customise data to address their unique business needs.WITH GLENIGAN ANALYTIX,YOU CAN:Track market trends and identify new opportunities Make informed decisions about where to invest resources Reduce risk and avoid costly delaysGlenigan Analytix is built on the UKs most comprehensive and up-to-date construction data,trusted by the ONS,government,and leading media.SIGN UP FOR A FREE DEMO TODAYAND SEE HOW WE CAN HELP YOU IMPROVE YOUR BUSINESS CONTENTSExpert Insights .4Economic Background.5Executive Summary .7The Political Landscape:DeHavilland.12UK Housing Outlook:Bloomberg.14New Technologies and Innovation:KPMG.16Private Housing .18Social Housing .21Industrial.24Offices .26Retail .29Hotel&Leisure .32Education.35Health .38Civil Engineering .40Republic of Ireland .42Key Recommendations .544EXPERT INSIGHTS TO DRIVE YOUR CONSTRUCTION STRATEGY FORWARD Glenigans bespoke research service provides construction industry businesses and sales leaders with actionable,data-driven insights,specifically tailored to expand their business pipeline.Our team is led by Allan Wilen,a highly respected construction industry expert with over 30 years of experience in market analysis and forecasting.Together with our Economics Unit,Allan brings a wealth of expertise on the UK construction and built environment markets.With a background that includes 20 years as Economics Director at the Construction Products Association,Allan continues to deliver valuable insights and in-depth market analysis.Supporting him are Yuliana Ivanykovych and Drilon Baca,two seasoned economists who provide rigorous research and analysis,enabling hundreds of businesses each year to make informed strategic decisions.Glenigans analysis is trusted by industry bodies and widely respected across thousands of construction businesses,from large infrastructure organisations to smaller enterprises.Featured in leading media,our market analysis team is the UKs go-to source of intelligence on the built environment.Our team of economists and analysts delivers custom research for commercial clients,government agencies,and trade organisations alike.From strategic forecasting to fully tailored reports,we provide the intelligence your organisation needs to plan confidently.Unlock the power of targeted insights with Glenigans bespoke research.Discover how we can support your growth aspirations here: Allan Wiln BSc(Hons),Economics DirectorYuliana IvanykovychSenior EconomistDrilon BacaEconomistECONOMIC BACKGROUNDA slowly improving UK economy will help lift construction activity over the next two years.The economy has returned to growth this year after the short-lived recession endured during the second half of 2023.A further acceleration in economic growth is anticipated for 2025 and 2026.The UK economy is set to grow by around 1%in 2024 supported by higher government spending and a recovery in consumer spending.The early July election helped dispel political uncertainty and improve investor confidence.The modest rise in consumer spending in 2024 is supported by a small rise in real household incomes.Whilst the rise in average earnings has decelerated sharply from 7.3%in 2023 to around 4%this year,the drop in consumer price inflation has been sharper,providing a lift to households spending power.Lower inflation has also paved the way for a gradual easing in interest rates that has bolstered business confidence and lifted housing market activity.Whilst some existing homeowners still face a rise in mortgage payments as their fixed rate deals expire this year and during 2025,the easing in bank base rates is helping to temper the rise.The Budget brought in several tax measures as the chancellor sought to tackle the governments budget deficit and fund an increase in public sector spending.Whilst the tax burden is increasing,the new measures including changes to inheritance tax,capital gains tax,non-dom rules and VAT on school fees predominantly fall upon wealthier households.This should limit the impact on overall consumer spending growth and confidence during 2025 and 2026.Higher government spending and recent public sector pay increases will also help lift consumer spending and economic growth over the near term.The Chancellors decision to reform the governments fiscal rules will provide a welcome boost to the economy and construction activity over the forecast period,enabling increased government borrowing to fund investment in UK infrastructure and the built environment.A further strengthening in household incomes is anticipated from 2025.This is expected to benefit consumer-facing construction sectors such as private housing,retail and hotel&leisure.An easing in borrowing costs,improved economic conditions and greater political certainty are also expected to boost investor confidence in industrial and commercial property markets from next year.Public funded investment has been disrupted this year by the General Election and the subsequent post-election review of existing programmes by the new government.The spending commitments in the Budget for 2025/26 provide greater clarity and should enable government departments to progress existing projects over the coming year.The Spending Review,scheduled for the Spring,will set out the new governments longer term funding commitments and priorities.This is expected to support a strengthening in public sector construction activity during the second half of the forecast period.5 6 These forecasts are built upon the analysis of Glenigans database of current and planned construction projects which have been examined alongside other market and economic variables.The key assumptions around which the forecasts are based include:A gradually improving UK economic outlook,lower borrowing costs and reduced political uncertainty support a progressive strengthening in private sector investment for non-residential sectors over the forecast period.A strengthening in real household incomes,together with an easing in interest rates support a recovery in housing market turnover and private housebuilding activity.The Spending Review in 2025 funds increased public sector construction activity during the second half of the forecast period.The Governments renewed commitment to delivering Net Zero accelerates investment in renewable energy and increases civil engineering starts.7 Political Stability:The General Election in July reduced political uncertainty and investor indecision,creating a more favourable environment for investment.Private Sector Projects:Project starts have stabilised in the second half of 2024 as confidence among private sector investors and consumers has improved.Public Sector Disruption:Public sector projects have been disrupted as the new Government reassesses programmes and priorities.FORECAST HIGHLIGHTS:2025-2026 OUTLOOK:Construction Project Starts:Expected to strengthen as UK economic growth gatherspace,supported by increased household spending and business investment.Public Investment:Projected to rise in the second half of the forecast period,following thenew Governments completion of the Spending Review.RECENT TRENDS IN CONSTRUCTION STARTS:2023 DECLINE:Overall Construction Starts:7cline due to weak economic activity and highinterest rates.2024 STABILISATION:Second Half:Construction starts stabilised as private sector confidence improved.Full-Year Forecast:1crease expected,a smaller decline compared to 2023.Q3 Contract Awards:Up 7%compared to Q3 2023,indicating a strengtheningdevelopment pipeline and a positive outlook for upcoming project starts.SECTOR-SPECIFIC INSIGHTS:Private Sector:Improvement in private work has supported the stabilisation of project starts,particularly in areas like private housing,retail,and hotel&leisure.Public Sector:Public sector activity slowed during 2024 as the General Election and subsequent government review delayed some planned projects.FUTURE INVESTMENT AND ECONOMIC BOOST:2025-2026 GROWTH:Renewed construction growth is anticipated as a stronger UK economy boosts consumerand business confidence.Expected increases in household spending should support growth in private housing,retail,and leisure sectors.Industrial and office project starts are forecast to rise with improved investor confidence.GOVERNMENT SPENDING:Budget 2025/26:Introduces fiscal rule changes aimed at increasing capital investment,projected to unlock more public sector and infrastructure investment.Further government investment strategy details will be provided in next SpringsSpending Review.EXECUTIVE SUMMARY8 CHART 1:Value of Underlying(under 100 million)Project-Starts Key drivers of growth:Gradual recovery in private housing starts during 2025 and 2026 as housing affordability improves and economic outlook brightens.Improved consumer spending lifts retail and hotel&leisure sector starts.Rise in office refurbishment work as premises are remodelled to accommodate a shift in post-pandemic working practices.Online retailing is a catalyst for renewed investment in logistics facilities from 2024.Increased public sector investment in education,health,and community&amenity during 2026.ActualForecast0201620152017201820192020202120222023202420252026Q1Q35,00010,00015,00025,00020,000 millionSource:Glenigan.f=forecastQ3fQ1fQ3fQ1fQ3fQ1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q19 million20232024f2025f2026fPRIVATE HOUSING28,10626,80630,18234,699SOCIAL HOUSING8,8707,5028,3569,249INDUSTRIAL5,2414,9325,1675,559OFFICES4,9203,8734,5674,747RETAIL1,7221,9611,9752,150HOTEL&LEISURE2,7993,3283,5143,829EDUCATION5,9286,2236,3856,413HEALTH3,2563,6103,6624,044COMMUNITY&AMENITY1,4971,6501,4671,541CIVIL ENGINEERING6,8188,5938,9829,640TOTAL69,15568,47874,25881,873TABLE 1:Value of Underlying Project-Starts(under 100 million)by SectorAnnual Change20232024f2025f2026fPRIVATE HOUSING-10%-5%SOCIAL HOUSING15%-15%INDUSTRIAL-30%-6%5%8%OFFICES-14%-21%4%RETAIL-13%1%9%HOTEL&LEISURE-15%6%9UCATION43%5%3%0%HEALTH-8%1%COMMUNITY&AMENITY3%-11%5%CIVIL ENGINEERING-6&%5%7%TOTAL-7%-1%8%TABLE 2:Growth in the value of Underlying Project-Starts(under 100 million)by SectorSource:Glenigan.f=forecastSource:Glenigan.f=forecast10 PRIVATE RESIDENTIALHousing market conditions have stabilised during 2024.An improvement in household incomes,an initial easing in mortgage rates and a brighter economic outlook have helped rebuild house purchasers confidence.The number of mortgage approvals during the third quarter of 2024 was 39%higher than a year earlier and the Nationwide reports that average house prices increased by 3.2%over the year to September.Improved market conditions have helped to stabilise private housing starts,after the sharp falls seen during 2023 and the first quarter of 2024.A strengthening in economic growth and further interest rate cuts are expected to further buoy house-buyers confidence during 2025 and 2026.This is forecast to support a strengthening in new housing activity as rising house sales encourage developers to accelerate the development of existing projects and open new sites.PRIVATE NON-RESIDENTIAL WORKAfter a strong post-pandemic rebound industrial starts fell back sharply in 2023 and have weakened further this year.Sharply higher interest rates dented the capital value of industrial property and knocked investor confidence last year,while weak retail spending has constrained the demand for warehousing and logistics space.Following this period of decline,the industrial sector is forecast to return to growth from 2025.Despite the squeeze on household budgets over the last three years,online purchases share of retail sales is still up on 2019 levels.Higher consumer spending is set to lift the demand for logistics and light industrial space from online retailers and third-party carriers.Investment by the deep discount supermarkets,Aldi,and Lidl,remains a bright spot with both chains pressing on with plans to expand their store networks and helped drive a 14%rise in project starts during 2024.Strengthening consumer spending as household incomes grow is forecast to support project starts over the next two years.An overhang of empty retail premises is also expected to prompt investment to refresh and repurpose existing excess retail space including shopping centres to create more mixed-use locations.Improving economic prospects have supported a bounce back in hotel&leisure projects this year.Hotel&leisure starts have rebounded during 2024 and further growth is anticipated over the next two years.The hospitality sector has faced tough market conditions since the pandemic but has benefited this year from an increase in consumers discretionary spending as households financial position has started to improve.A further improvement in consumer spending is expected to underpin a progressive strengthening in investors confidence and investment in the sector during 2025 and 2026.Office starts have continued to decline during 2024,dropping by 21%.Higher borrowing costs and an overhang of available floorspace have prompted investors to defer planned projects.The sector is expected to return to growth from next year.Although changing working patterns are reducing the overall demand for office space,they also remain an important driver for office refurbishment projects as landlords and occupiers remodel premise to support hybrid working.In addition,regulatory changes and growing demand from corporate occupiers for premium office space with a good environmental performance is forecast to generate retrofit and new build opportunities over the forecast period.INCREASED GOVERNMENT INVESTMENT The flow of public sector project starts has been disrupted during 2024 by the general election and the subsequent review of public sector investment programmes by the new government.A sharp increase in the Department of Educations capital funding over the last two years and action to tackle RAAC defective buildings helped drive a 41%leap in school building projects in 2023,with further growth seen during 2024.The Budget included increased capital funding for the school rebuilding programme during 2025/26 which the Government expects to enable 100 projects to start during the next financial year.The Budget also included additional capital funding for further education.Universities finances are under pressure from capped UK student fees and a sharp drop in overseas student numbers.This is forecast to curb university building projects over the forecast period.Health project-starts have recovered this year following the disruption to programmes during 2023.The Chancellor unveiled increased capital funding for the NHS during 2025/26.Whilst non-construction areas such as technology and diagnostic scanners are priority areas,funding will also be directed at tackling RAAC and the repair backlog on the existing estate.Next Springs Spending Review will set out the Governments longer term spending plans,and increased capital funding is expected to support renewed growth in 2026.Greater cost stability and increased government funding has helped housing associations to increase their development activity this year.Whilst some decline is anticipated over the coming months,the further funding increase for 2025/26 announced in the Budget is expected to lift project starts from the second half of 2025.After a surge in work last year,a drop in student accommodation projects has dampened overall sector starts this year.However,a progressive strengthening in student accommodation projects is anticipated over the next two years.Whilst several major infrastructure projects have been cancelled or delayed post-election,there has been a strong increase in the value of underlying infrastructure and utilities projects starting on site.Civil engineering starts have rebounded this year,after a 6cline during 2023.A sustained recovery in infrastructure projects is anticipated over the next two years,with the Budget increasing the funding for smaller scale projects such as road repairs.In contrast the utilities sector is expected to benefit from a rise in major project-starts alongside a broader strengthening in activity.The water industry is seeking the regulators approval for a substantial increase in capital works to reduce pollution discharges and the new government is set to drive increased investment in renewable energy generation and distribution over the forecast period.11 12 THE POLITICAL LANDSCAPE:THE FIRST MONTHS OF THE NEW GOVERNMENT Michael Cameron,Senior Policy Analyst WHAT HAS CHANGED SINCE JUNE?It is fair to say that there has been a degree of political change this year.With the first change in power for 14 years,politics is now largely slipping out of the picture.This is now a Government,fundamentally,in governing mode:the business of devising policy and legislating is back in full swing.Julys Kings Speech was one of the busiest in recent years,setting out 40 pieces of legislation that the Government intends to pass over roughly the next 12 months.Last months Budget was a significant one,both in tax and spend.The capital expenditure programs,particularly in education and health will be significant.For schools,6.7 billion was announced for capital and 1.4 billion for the schools rebuilding programme,which will rebuild over 500 schools in England in total with 100 projects starting next year.For the NHS,there was an additional commitment of 1 billion for hospital repairs and upgrades.The Government also confirmed,as expected,funding to deliver HS2 to Euston(though not funding for an“HS2 Light”between Birmingham and Manchester).The politics of construction From the Budget,it is clear that the Government is committed to capital expenditure,particularly in the health and education portfolios;they were the noticeable winners of last months fiscal events.Though,the Government displayed a lukewarm approach to infrastructure investment in its first Budget,with their commitment to take HS2 to Euston and deliver existing half-built projects such as East-West Rail and the TransPennine Route Upgrade welcomed by the sector.However,all was not rosy,with road projects including the A1 upgrade at Morpeth being cancelled and no commitment made to fund the Lower Thames Crossing.The new National Infrastructure and Service Transformation Authority will merge the existing Infrastructure and Projects Authority and National Infrastructure Commission into a new body tasked with both recommending and monitoring infrastructure projects.Over the course of the Parliament,it is likely that the new NISTA will have a key place in the conversations around new grid or water infrastructure.The launch of NISTA will support the 10-year infrastructure strategy,which we expect to be published alongside the Spending Review in the spring.Remediation will continue to be a key issue for MHCLG and their relationship with developers.A remediation action plan will be launched before the end of the year,aimed largely at increasing the pace of remediation,which is something that the National Audit Office recently suggested had“considerable uncertainty”.Defra will also publish their land use framework,which,while having a principally climate and agriculture focus,will have an impact for the construction sector.It is expected that something close to 10%of the UKs land needs to be repurposed by 2030,likely mostly low-grade farmland.How this framework impacts the provision of new net zero infrastructure and how it interlinks with the 10-year infrastructure strategy will be key to watch.13 Looking forward to the spring The spring will bring two particularly important moments for the sector.First,we expect the planning and infrastructure Bill to be introduced to Parliament.This legislation will reform the planning system to deliver new“critical”infrastructure,mainly through streamlining the national significant infrastructure planning process.Reforms will also be made to local planning authorities with the aim of speeding up decision making,while the Government will also reform compulsory purchase rules and allow development to better support nature recovery.Though,as has been alluded to,the more important moment in the spring will be the conclusion of the second phase of the Spending Review we expect it in the later part of the season.This will set the departmental spending plans for at least three years including for capital spending and will also see the publication of key strategies:the infrastructure strategy,the third road investment strategy,the final industrial strategy and individual sector plans within that,and the 10-year NHS strategy.Each of these will dictate how the Government wants to see its five missions delivered over the course of the Parliament;the next few months will be key for the construction sector.Michael Cameron,Senior Policy Analyst,DeHavilland Michael specialises in housing,construction,and local government policy within the infrastructure policy team at the political monitoring company DeHavilland.Interested in finding out more?Visit dehavilland.co.uk to find out more about how DeHavilland can help your organisation.14 UK HOUSING OUTLOOK:2025 RECOVERY DENTED BY BUDGETIwona Hovenko,Senior Equity Research Analyst Bloomberg Intelligence The strength of 2025 recovery in UK house sales and prices could be dented by a slower easing in mortgage rates after the new budget,though we still expect better momentum next year vs.2024.Thats after the new UK fiscal plan which may keep inflation higher could slow down the pace of BOE rate reductions,with markets implying just one cut by the end of 2024 vs.two seen prior.The BOE rate might fall to 4.1%in a year vs.3.9%expected just a month ago,based on market pricing,though thats far lower than the 4.6%year-ahead view in June.After that,the bank rate is seen remaining near 4%by mid-2027.Thats much more hawkish than Bloomberg Economics forecasts for the BOE benchmark reaching 3%by 3Q26,with other economists pointing to a similar level,suggesting a possible better outlook for homebuyers.No(Major)Budget Bad News Is Good News for HousingSome of the potentially detrimental changes for housing such as hikes of capital gains or council tax have been avoided in the budget.Yet a higher employers National Insurance contribution may dampen wage growth and job creation,weighing on housing.There were no direct inheritance-rule changes for housing,but thresholds have been frozen for two more years until 2030,which may drag more families into paying the tax,if house prices keep rising.A stamp-duty surcharge hike on additional homes to 5%from 3%may force some investors to rethink and abandon the deal or switch to cheaper regions,where the extra tax bill is lower and rental yields are higher.Sales to Return to Long-Term Trend as Higher Rates Set In Lower mortgage rates vs.2023 may support a recovery in UK housing transactions,with buyers getting used to the“new normal”of rates near 4%,while the prior sub-2%level is unlikely to return anytime soon.Rates are key to supporting a rebound,even as their decline may be slower than expected prior to the recent UK budget.Transactions may return to long-term average of about 1.2 million house sales in 2025,even as the distribution may be distorted by the reversal to lower stamp-duty thresholds from April.Weak 2022-23 Mortgage Approvals=Pent Up Demand?15 Stamp-Duty Bands Heading in Wrong Direction as Prices Rise A reversal to lower stamp-duty thresholds from April 2025 may create a rush of buyers seeking to beat the deadline especially among first-time buyers who may see a bigger tax hike immediately followed by lower sales.Yet the relatively small savings(up to 2,500 for most)could mean a cliff edge could be avoided.First-time buyers may be harder hit(paying as much as 6,250 in increased tax),which might lead them to put off deals after the hike amid a high cost of living and record rents.Prospective homeowners are already facing steep affordability challenges,especially as prior support for first-time home buyers(Help to Buy)ended just as interest rates soared.Steep Affordable-Home Targets Need Help for Math to Work Developers focused on affordable and entry-level homes,may be well-aligned with the government goals.Yet steep affordable-housing targets(40-50%)expected for some projects could make the math tough for homebuilders and hinder delivery.Thats unless land values reflect the more onerous burden or some subsidies help improve viability.The government also cant solely rely on profit-driven developers to deliver its target of 1.5 million homes over five years,given the cyclical nature of the industry,which aligns build rates to demand.Attracting smaller builders back into the market after many exited amid hefty regulation and capital intensity,with only the largest ones able to cope is key to diversifying housing supply,making the planning overhaul and accessible funding key.Iwona Hovenko,Senior Equity Research Analyst,Bloomberg IntelligenceIwona Hovenko is a Senior Equity Research Analyst with Bloomberg Intelligence.She covers European housing,with a focus on the UK market,looking at the companies operating in that space,as well as the wider industry trends.Interested in finding out more?Visit Homebuyers Getting on With Purchase PlansBuyers Getting On With Purchases Flag High-Rates AdjustmentBuyers getting used to high rates and proceeding with purchases as planned may support housing activity and sales of homebuilders,whore dependent on wider housing-market sentiment,given new builds account for only about 15%of annual transactions.Thats as a growing proportion of survey respondents said in June that their buying plans were unchanged(37%in June vs.29%in February),more than offsetting the decrease in the share of those who brought their plans forward.Notably,though,the fear of further price rises was by far the most-often cited reason for respondents who brought their plans forward.16 NEW TECHNOLOGIES AND INNOVATION AS AN ENABLER FOR HARNESSING RESILIENCE AND GROWTH IN THE UK CONSTRUCTION INDUSTRY Krystle Drover,B.Eng,P.Eng,Associate Director,Major Project Advisory KPMG in the UK INTRODUCTION The UK construction industry stands on the brink of recovery,driven by economic growth and a stabilised political landscape.The role of advanced technologies in improving data management and unlocking insights to enable critical business decisions is now more than ever front of mind for the sector to build on the successful traditional approaches while enabling future innovation.One popular example is Artificial Intelligence(AI),a frequently discussed technology that exemplifies digital enablement in todays market1(footnote 1).The anticipated economic upturn and increased public sector investment offer a unique opportunity to integrate technology-driven solutions across the sector,paving the way for innovation,efficiency,and resilience to ever-changing market factors.Leveraging digital tools,data-driven insights,and innovative construction methodologies in areas such as budget forecasting,programme planning,procurement,and risk management can be transformative,enabling the construction industry to not only meet increased demand but also optimize resources and improve outcomes.Technology and Risk Management Integrating technology solutions and new approaches to data collection,flow of information,governance and consistency in evaluation,can create better predictability and cost certainty,which has the potential to substantially enhance risk management within the construction industry,particularly in baseline analysis and forward planning.Traditionally,the effort to gather and structure data meaningfully has strained internal resources,often resulting in a“rearview”perspective that limits proactive decision-making and leads to cost inflations and project disruptions.However,this is a journey where the first step involves qualifying historical baseline data to improve future performance.A“right-fit”approach to technology integration,tailored to leverage historical data and identify gaps in traditional construction practices can bridge this divide.New technologies offer an opportunity to monitor,measure,and assess the effectiveness of historically chosen key performance metrics,highlighting areas where new methodologies or tools can enhance productivity,strategy,and sustainability.By embracing this data-backed approach,the construction sector can improve on its current well-established strategies and experience to balance a staged approach to future change.This can be balanced with the right level of risk appetite of an organisation to help build resilience to market strain and costs through well selected innovative approaches in an evolving market while ensuring steady project progress.Identifying and Addressing Gaps for InnovationFor example,if AI highlights delays in procurement as a recurring issue,the construction industry can prioritise innovative approaches,such as new digital procurement tools or predictive models,to streamline this part of the process.Similarly,identifying a lack of skilled labour in certain regions could guide investments in construction innovations,innovative products or other labour-reducing approaches to the build process itself,to maintain productivity and project timelines.This targeted approach to innovation enables the construction sector to implement changes that drive measurable improvements in performance and productivity.17 In addition to supporting operational improvements,AI can help the construction industry pinpoint specific areas within organisations where improvements are needed,providing a data-driven basis for focusing on the highest-impact areas.By analysing patterns in historical performance delivery data,AI can highlight gaps in existing processes or areas with productivity bottlenecks.This insight is invaluable for guiding innovation efforts,as it allows organizations to focus on developing solutions,whether in processes,materials,or construction products that directly address these identified gaps.Similarly,construction innovation products tailored to address productivity losses or labour shortages can significantly reduce delays,improve build quality,and mitigate the impact of skilled labour gaps.Such innovations improve industry margins and lead to enhanced construction outcomes,making them essential to any modern,resilient construction strategy.Given the Glenigan forecast expectations for stable construction growth,leveraging new technologies,when integrated in a tailored approach,can serve as valuable allies in achieving reliable planning,streamlining predictability in project timelines,and securing cost certainty.However,it should be noted that any technology and innovation will still rely on a cultural shift to adoption and approaches to investment.This traditionally has not been without its own challenges,but now,more than ever is acknowledged as a key enabler to growth,efficiency,and insight to evolve the sector.Moreover,these technologies and innovations can help enable the construction sector to unlock improvements in productivity,forecasting,and proactive risk identification,helping to offset potential future disruptions.Footnote 1:AI is used here as an illustrative example of a popular technology.Many other innovations exist in business enablement,including advancements in construction processes,new materials,and emerging digital tools.This commentary presents AI solely as an example,not as a comprehensive solution or approach.KPMG is a global network of professional firms providing Audit,Tax and Advisory services.In the major projects advisory team,we are a market leader in partnering with clients to maximise value through significant capital investments and complex transformations,working across projects,programmes and portfolios.Our multidisciplinary,diverse,outcome-focused team of 100 industry experts are driven by purposeful work to achieve positive change for our local communities and make a lasting global difference.Krystle Drover,Associate Director,Major Project Advisory KPMG in the UK Krystle is a professional engineer with 20 years of industry experience leading in technical due diligence,industrialisation and innovation.She is recognised in the infrastructure and energy industries for her technical contributions accelerating routes to delivery,unlocking stranded projects and creating evidenced cost efficient innovative solutions.She is a recognised expert in project delivery,commercial,assurance and construction.She has experience in end to end programme management as well as,intellectual property creation and commercialisation.Interested in finding out more?Visit to find out more about how KPMG can help your organisation.18 Private housing project starts stabilise during second half of 2024Housing project starts to grow in 2025 and 2026 as market conditions improveBudget support for SMEs and build to rent to help broaden development activityImproved market conditions have helped to stabilise private housing starts,after the sharp falls seen during 2023 and the first quarter of 2024.A strengthening in economic growth and further interest rates cuts are expected to further buoy house-buyers confidence during 2025 and 2026.PRIVATE HOUSING STARTS2023 2024f 2025f 2026f million 28,106 26,806 30,182 34,699 Growth-10%-5%Source:Glenigan.f=forecastPRIVATE HOUSING-5 24 13 25 15 2619 STATE OF THE SECTORHousing market conditions have stabilised this year,after the sharp decline in activity during 2023.The UK housing market faced headwinds in 2023 as rising inflation and interest rates squeezed households disposable income.Fewer property transactions and weaker house prices deterred developers from opening new sites,with starts dropping 10%last year and remaining sluggish during the opening months of 2024.An improvement in household incomes,an initial easing in mortgage rates and a brighter economic outlook have helped rebuild house purchasers confidence as 2024 has progressed.The number of mortgage approvals during the third quarter of 2024 was 39%higher than a year earlier and the Nationwide reports that average house prices increased by 3.2%over the year to September.The improvement in market conditions has enabled housebuilders to accelerate activity on existing projects and has stabilised project starts during the final six months of the year.CHART 2:Value of Private Housing Projects Securing Planning Approval01,0002,0003,0004,0005,0006,0007,0008,000South EastNorth WestEast of EnglandSouth WestLondonEast MidlandsScotlandNorth EastWest MidlandsNorthern IrelandWalesYorkshire&The Humber20232024Source:GleniganN.B.2024 data is based on January to September pro rata million20 CHART 3:Private Housing Detailed Planning Approvals by Project SizeTHE FUTURE OF THE SECTORA strengthening in economic growth and further interest rates cuts are expected to buoy house-buyers confidence during 2025 and 2026.Although UK wage growth slowed to 4.9%in the three months to August according to the Office for National Statistics,lower inflation and the easing in interest rates have improved affordability.With inflation back on target,the Bank of England is expected to ease interest rates further over the coming months.An upturn in housing transactions and house prices is anticipated over the next two years.This is forecast to support a strengthening in new housing activity with developers accelerating the development of existing projects and opening new sites.Although approvals have been on a downward trend for the most part this year,housebuilders have a strong pipeline of previously approved developments.Furthermore,the governments planning reforms are expected to support an uptick in new approvals and housing development over the forecast period.In addition,the Budget included 3 billion in support for SMEs and the build-to-rent sector.This should help foster new and smaller developers,potentially unlocking smaller sites that are of less appeal to more established housebuilders,and lift overall new housing supply.10,00020,00030,00040,00050,000060,00070,00090,000100,00080,000Number of Units201620172018201920202021202220232024Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2Up to 910 to 1415 to 4950 to 99100 to 249250 to 4991,000 plus500 to 999Source:Glenigan21 Social housing is a key political priority for Labour,with new policies set to drive growth in 2025 and 2026Allowing local governments to retain earnings from council housing sales is expected to boost housing starts over the next two yearsMore student accommodation projects are planned for 2025 and 2026SOCIAL HOUSING STARTS2023 2024f 2025f 2026f million8,8707,502 8,356 9,249 Growth15%-15%Greater cost stability and increased government funding has helped associations to increase their development activity this year.Whilst some cost saving is anticipated over the coming months,a further funding increase for 2025/26 announced in the Budget is expected to lift project starts from the second half of 2025.After a surge in work last year,a drop in student accommodation projects has dampened overall sector starts this year.However,a progressive strengthening in student accommodation projects is anticipated over the next two years.Source:Glenigan.f=forecastSOCIAL HOUSING-15 24 11 25 11 2622 CHART 4:Value of Underlying Social Housing(under 100 million)Detailed Planning ApprovalsSTATE OF THE SECTORHousing associations have focussed their development activity on low rise housing projects this year at the expense of apartment schemes.Housing projects are estimated to have grown by 40%this year,accounting for 52%of sector activity.In contrast,apartment project starts have dropped 20%and accounted for a quarter of sector activity,down from 33%in 2023.The decline in apartment projects commencing on site may reflect the added cost and delays associated with high rise projects following the introduction of the Building Safety Act.After a surge in starts last year,student accommodation projects are estimated to have declined by 20%in 2024.20232024Source:GleniganN.B.2024 data is based on January to September pro rata04008001,0001,2001,4001,6001,800600200South WestSouth EastScotlandEast MidlandsLondonYorkshire&the HumberWalesNorth WestNorth EastNorthern IrelandEast of EnglandWest Midlands million23 CHART 5:Value of Underlying Social Housing Project-Starts(under 100 million)by YearTHE FUTURE OF THE SECTORWhile a slight slowdown in housing association development is expected in the near term,new social housing provision is set to strengthen over the forecast period.Improved cost stability has given housing associations greater confidence to plan and move forward with their development projects.The Budget provided an additional boost for the sector,with an extra 500 million increasing the Affordable Homes Programme for 2025/26 to 3.1 billion.The Government is also reducing the discounts on right to buy sales,with local authorities able to retain full receipts from any sales to fund new social housing.The Spending Review is expected to include a further rise in capital funding over the course of this parliament,with social housing provision set to make an important contribution towards the Governments target of 1.5 million new homes.Additionally,plans to allow above inflation increases in rents over the next five years will enable social landlords to borrow more to fund new build projects.Student accommodation starts are forecast to return to growth over the next two years.Easing interest rates will improve the financing of new developments.In addition,the demand for purpose-built student accommodation is likely to grow despite a plateauing in student numbers as buy to let investors exit the market following tax and regulatory changes.Source:Glenigan millionf=forecast201320122014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024f 2025f 2026f6,0008,00010,0004,0002,0000HousingKey WorkersApartmentsStudent AccommodationSheltered&Elderly Persons,Hostels24 Moderate decline anticipated in 2024Stronger economic growth expected to drive growth from 2025 onwardIncreased investment projected in manufacturing and warehousing facilitiesThe industrial sector has seen further reduction in project starts this year after the post-pandemic boom in logistics facilities.Following this period of consolidation the sector is forecast to return to growth from 2025 as investor confidence is lifted by brighter economic prospects,easing interest rates and revived demand for logistics space.INDUSTRIAL STARTS2023 2024f 2025f 2026f million5,241 4,932 5,167 5,559Growth-30%-6%5%8%Source:Glenigan.f=forecastSTATE OF THE SECTORAfter a strong post-pandemic rebound industrial starts fell back sharply in 2023 and have weakened further this year.Sharply higher interest rates dented the capital value of industrial property and knocked investor confidence last year,while weak retail spending has constrained the demand for warehousing and logistics space.Project starts decreased 30%in 2023 and a further moderate 6cline in industrial starts is expected this year.Demand for warehousing and logistics space has weakened as a result of a decrease in consumer spending.However,a strong rise in retail sales in the year to September 2024 provides some optimism.The industrial and logistics sector will also be impacted by the proposed changes in planning policies,outlined in the National Planning Policy Framework released at the end of July.INDUSTRIAL-6 24 5 25 8 2625 THE FUTURE OF THE SECTOR The sector is expected to gradually recover from next year,mainly driven by manufacturing and warehousing projects.Although the online retail market has long passed its peak after the start of the pandemic,its share remains higher than pre-pandemic levels and is expected to continue growing,driving the demand for warehouse and logistics space.Higher consumer spending is set to lift the demand for logistics and light industrial space from online retailers and third-party carriers.Although the value of planning approvals has fallen back this year,there is a significant pool of previously approved projects that developers and investors can take forward over the next two years in response to the strengthening in demand for industrial floorspace.CHART 7:Value of Underlying Industrial Project Approvals(under 100 million)in 2023 and 2024 Pro-RataCHART 6:Value of Underlying Industrial Project-Starts(under 100 million)by YearSource:Glenigan millionWarehousing&LogisticsOtherManufacturingf=forecast2015201620172018201920202021202220232024f2025f2026f6,0007,0008,0004,0005,0002,0003,0001,0000North EastWalesNorthern IrelandScotlandSouth WestYorkshire&the HumberEast MidlandsWest MidlandsLondonNorth WestEast of EnglandSouth East2023202402004006008001,0001,2001,4001,600 millionSource:GleniganN.B.2024 data is based on January to September pro rataThe Government has proposed that local planning authorities should identify suitable commercial sites for investment to support economic growth.There is also a strong focus on expanding the tech sector,with rising demand for industrial and logistics space driven by growth in the semiconductor industry.26 Decline anticipated in 2024,with recovery expected in 2025-2026 as investor confidence reboundsAdvances in AI may boost demand for data centresStrong interest in sustainable office spacesOffice starts have been on a downward trajectory throughout the year,as high interest rates dampened investor confidence.The sector is expected to decline 21%in 2024;however,the brighter economic outlook promises growth in the longer term.OFFICE STARTS2023 2024f 2025f 2026f million4,920 3,873 4,567 4,747 Growth-14%-21%4%STATE OF THE SECTOROffice starts have continued to decline during 2024,dropping by 21%.Stalling economic growth and the spike in interest rates led to a 14cline in office starts in 2023.Additionally,a slowdown in the job market,with rising unemployment and falling vacancy rates,further eased the demand for new office space.This slowdown has continued during 2024,with investor confidence remaining low.Office starts are estimated to have declined by 33%in the third quarter of this year.However,there has been some improvement in the pipeline as detailed planning approvals increased by 28%from the previous quarter,standing 1%higher than last year.Additionally,increased office lettings in the Big 6 regional markets Birmingham,Bristol,Edinburgh,Glasgow,Leeds,and Manchester indicates greater employer optimism for higher office attendance.Source:Glenigan.f=forecastOFFICES-21 24 18 25 4 2627 CHART 8:Value of Underlying Office Project Approvals(under 100 million)in 2023 and 2024 Pro-RataTHE FUTURE OF THE SECTORIn October,Technology Secretary Peter Kyle announced a 6.3 billion investment in data infrastructure.With the rapid advancement of AI,demand for data centres is expected to keep rising,boosting overall sector activity in the latter part of the forecast period.Hybrid working trends are projected to drive sector growth in 2025 and 2026,with new builds and refurbishments in demand.Although total office space requirements are set to decline,there remains strong demand for high-quality,centrally located office spaces as companies reassess their needs.Tenants are also placing greater emphasis on environmentally efficient buildings to lower their carbon footprint.Despite a decrease in detailed planning approvals,there is a robust pipeline of projects ready for construction,led by London and followed by the South East.20232024Source:GleniganN.B.2024 data is based on January to September pro rata02004006008001,0001,2001,4001,600Yorkshire&The HumberSouth EastNorth WestNorthern IrelandLondonEast of EnglandWalesScotlandEast MidlandsNorth EastWest MidlandsSouth West million28 CHART 9:Value of Underlying Office Project Approvals(under 100 million)by Type of Development WorkSource:Gleniganf=forecast millionApprovals ExtensionApprovals Refurbishment OnlyApprovals New20172018201920202021202220232024f6,0007,0004,0005,0002,0003,0001,0000N.B.2024 data is based on January to September pro rata29 A positive economic outlook supports an increase in retail projects during the forecast period Growth expected to be led by shops and supermarketsThe retail sector is projected to see a strong recovery in project starts this year.Further growth is anticipated in 2025 and 2026,driven by rising consumer spending.Supermarkets are expected to play a key role in this expansion.RETAIL STARTS2023 2024f 2025f 2026f million1,722 1,961 1,975 2,150 Growth-13%1%9%Source:Glenigan.f=forecastSTATE OF THE SECTORThe retail sector has improved this year,as stronger consumer spending has helped ease some of the pressures on UK retailers.In 2023,retail construction faced challenges from weak consumer demand,rising costs,and the shift toward online sales,leading to a 13%drop in project start values and a 7cline in detailed planning approvals.However,signs of recovery are emerging,with retail project starts estimated to grow by 14%this year.Investment from discount chains like Aldi and Lidl continues to be a bright spot,as both move forward with plans to expand their store networks.RETAIL 14 24 1 25 9 2630 CHART 10:Value of Underlying Retail Project Approvals(under 100 million)in 2023 and 2024 Pro-RataTHE FUTURE OF THE SECTOR A steady increase in retail project starts is expected over the next two years,driven by anticipated growth in consumer spending.This trend is likely to encourage retailers and developers to advance planned projects,with supermarkets leading the growth,followed by other retail shops.However,the abundance of vacant stores may slow the pace of growth over the forecast period.On a positive note,the Government has pledged to reduce the business rates burden on smaller retailers.The recent Budget provides temporary relief for small businesses in the next financial year,with a long-term reform to lower business rates for high street retail,hospitality,and leisure properties starting in 2026-27.This support is expected to stimulate investment in retail spaces.With inflation down to 1.7%,consumer purchasing power is set to improve,boosting retail sales as low inflation persists.As a result,strong growth is anticipated in 2024,followed by a more moderate increase in project starts in 2025 and 2026.20232024Source:GleniganN.B.2024 data is based on January to September pro rata050100150200250300350South EastYorkshire&The HumberSouth WestEast MidlandsNorth WestWest MidlandsScotlandWalesNorth EastNorthern IrelandEast of EnglandLondon million31 CHART 11:Value of Underlying Retail Project-Starts(under 100 million)by Segment millionSource:GleniganSupermarketsShopping CentresOther RetailShopsPetrol Filling StationsRetail Warehousingf=forecast1,0001,5002,0002,5003,0005000201620172018201920202021202220232024f2025f2026f32 Hospitality industry projected to recover as consumer spending risesIncreased tourism is a promising sign for hotel and leisure developmentsAfter enduring a period of economic hardship,hotel&leisure starts have rebounded during 2024 and further growth is anticipated over the next two years.Rising disposable incomes and a projected surge in tourism are expected to be the key catalysts,fuelling investment and propelling project starts over the next two years.HOTEL&LEISURE STARTS20232024f2025f2026f million2,799 3,328 3,514 3,829 Growth-15%6%9%Source:Glenigan.f=forecastHOTEL&LEISURE 19 24 6 25 9 2633 STATE OF THE SECTORThe hospitality sector faced significant challenges post-pandemic,which contributed to a decline in project starts in 2023.However,hotel&leisure projects have rebounded this year,benefiting from increased consumer discretionary spending.In the third quarter of 2024,hotel&leisure starts grew by 29%from the previous quarter,standing 83%higher than the same period last year.With the economy gradually improving and inflation decreasing,consumers disposable income is increasing,allowing for more spending on leisure activities.Although tourist spending has declined,the number of visitors to the UK has risen since 2022,encouraging hotel investments.VisitBritain reports that inbound visits finally exceeded pre-pandemic levels in early 2024,with further growth in visitor numbers over the first half of the year compared to 2023 and 2019.CHART 12:Value of Underlying Hotel&Leisure Project-Starts(under 100 million)by YearTHE FUTURE OF THE SECTOR A gradual rise in household income is expected to boost discretionary spending on hospitality and leisure over the next two years.This,along with a continued recovery in international tourism,should attract investors and drive project starts in the sector.The introduction of permanently lower business rates multipliers for high-street retail,hospitality,and leisure(RHL)properties in 2026-27 is likely to stimulate growth in hotel&leisure construction.This measure will reduce long-term operational costs,making investments in new developments,expansions,or upgrades more financially viable for businesses.millionSource:Glenigan.f=forecast Cafs,Restaurants&Fast FoodCinemas&TheatresHotels&Guest HousesOther Hotel&LeisureSport FacilitiesIndoor Leisure Facilities1,0001,5002,0002,5003,5004,5003,0004,00050002018201920202021202220232024f2025f2026f34 Chart 13:Value of Underlying Hotel&Leisure Project Approvals(under 100 million)in 2023 and 2024 Pro-Rata20232024Source:GleniganN.B.2024 data is based on January to September pro rata02004006008001,0001,2001,4001,6001,800LondonSouth WestSouth EastNorth EastEast of EnglandWest MidlandsNorth WestYorkshire&the HumberEast MidlandsWalesNorthern IrelandScotland millionThe project pipeline has also strengthened this year,with detailed planning approvals up 4%in the third quarter 35%higher than the same period last year.This rise in approvals is expected to support a 19%increase in project starts in 2024,helping to reverse the decline from 2023.However,the introduction of a tourist tax may add a cost burden to the hospitality sector,potentially slowing the pace of recovery over the next two years.35 School construction projects expected to rise in 2025 and 2026Additional funding directed toward the School Rebuilding Programme and addressing RAAC issuesFewer higher education projects anticipated due to university budget constraintsEducation starts have grown by 5%this year.Building on the 43%surge in activity seen during 2023.Last years jump was fuelled by an increase in capital funding for the Department of Education.Looking ahead,more modest sector growth is anticipated in 2025 with starts stabilising in 2026 as an increase in school building projects is offset by a weakening in higher education investment.EDUCATION STARTS2023 2024f 2025f 2026f million5,928 6,223 6,385 6,413 Growth43%5%3%0%STATE OF THE SECTOR School building projects have seen steady growth,increasing by 10%this year and accounting for 68%of sector starts.This growth builds on a 42%surge in 2023,supported by higher departmental capital funding to address a 17%rise in secondary school enrolment since 2016.Additional funding has also been allocated to address RAAC issues in school buildings.RAAC has been confirmed in 234 schools across England,with over 100 needing major refurbishment or rebuilding and the remaining requiring minor repairs.Source:Glenigan.f=forecastEDUCATION 5 24 3 250 2636 FUTURE OF THE SECTORThe education sector is forecast to grow by 5%this year,then stabilise in 2026.School building projects will likely remain the sectors main driver,supported by a 22pital budget increase in 2025/26,including an additional 500 million for the School Rebuilding Programme.Further growth is anticipated in 2026,with a possible increase in demand for secondary school facilities if private school enrolment decreases due to new VAT on fees.This could drive new construction and upgrades for secondary school buildings to meet increased demand.In contrast,the university sector faces ongoing challenges.After a brief spike in 2023,university project starts have declined.Unchanged tuition fees for UK students since 2017 and recent visa restrictions impacting overseas enrolments have created financial strain on universities,limiting their ability to fund new projects.Research by PwC for Universities UK suggests that a significant proportion of universities are vulnerable to these pressures,and with no apparent increase in funding for higher education,university construction is expected to remain under pressure.CHART 14:Value of Underlying Education Project Approvals(under 100 million)in 2023 and 2024 Pro-Rata20232024Source:GleniganN.B.2024 data is based on January to September pro rata0100200300400500600700800North EastLondonSouth EastYorkshire&The HumberNorth WestScotlandSouth WestEast of EnglandWest MidlandsNorthern IrelandYorkshire&The HumberWales million37 CHART 15:Value of Underlying Education Project-Starts(under 100 million)by YearChart 15:Value of Underlying Education Project startsCollegesUniversitiesSchoolsOtherf=forecastSource:Glenigan million201520162017201820192020202120222024f2025f2026f20238,0006,0007,0004,0005,0003,0002,0001,0000N.B.Excludes projects with a construction value in excess of 100m38 NHS is a top priority for the new Labour government Increased funding is set to boost healthcare projects over the forecast period Sharp growth forecast for 2026 as funding risesThe long-term outlook for the health sector remains positive.Health project-starts have recovered this year following the disruption to programmes during 2023.Improving the NHS is a high priority for the new Government.Near term,the recent Budget included increased capital funding for the NHS in 2025/26.Next springs Spending Review and a promised 10-year plan for the NHS will set out the governments strategy and spending plans for the health service in more detail.HEALTH STARTS2023 2024f 2025f 2026f million3,256 3,610 3,662 4,044 Growth-8%1%STATE OF THE SECTORProject starts in the health sector rebounded by 11%this year,reversing the 8cline from 2023 when resources were redirected toward industrial disputes and long waiting lists.Although delays have impacted major projects in the New Hospital Programme,smaller projects moved forward this year.While the NHS remains a high priority for the Government,a 17cline in detailed planning approvals during the first nine months of 2024 may limit new project-starts in the near term.Source:Glenigan.f=forecastHEALTH 11 24 1 25 10 2639 Chart 16:Value of Underlying Health Approvals(under 100 million)by Year and RegionTHE FUTURE OF THE SECTOR The Chancellor announced a 15%increase in NHS capital funding for 2025/26 in this years Autumn Budget,with funds allocated to technology and diagnostic equipment,RAAC repairs,and maintenance of existing facilities.This increase is expected to support a modest rise in project starts in 2025,along with continued progress on the New Hospital Programme.Sector growth is expected to strengthen in 2026,with the governments long-term spending plans to be outlined in the spring Spending Review.The forthcoming 10-year NHS plan,which aims for 2%productivity growth,is expected to focus on infrastructure improvements that enhance efficiency.The increased capital budget of 3.1 billion,including funds for repairs,hospital beds,and testing facilities,will support critical projects to expand capacity and address maintenance backlogs.20232024Source:GleniganN.B.2024 data is based on January to September pro rata0200100300400500600700800900South EastEast MidlandsWest MidlandsEast of EnglandYorkshire&The HumberNorth WestLondonSouth WestNorth EastWalesScotlandNorthern Ireland million40 Underlying civil engineering starts(under 100 million)have rebounded strongly this year,after a 6cline during 2023.Further growth is anticipated for 2025 and 2026.Utilities work is expected to grow strongly,with increased investment in electricity generation and distribution to support the transition to Net Zero,and as the water industry steps up capital expenditure.STATE OF THE SECTORWhile several major infrastructure projects have been delayed or cancelled,underlying infrastructure and utility project starts grew significantly in 2024.Civil project starts valued under 100 million rose by an estimated 26%,with government funding channelled into smaller infrastructure projects and utility investments continuing.The development pipeline has expanded,with detailed planning approvals rising by 23%in the first nine months of 2024.Utilities work contributed strongly,with approvals up 33%during the same period.Although major project starts declined,ongoing work on large projects,including HS2 Phase One,has sustained overall activity and will continue to drive the sector in the forecast period.CIVIL ENGINEERING STARTS2023 2024f 2025f 2026f million6,8188,593 8,982 9,640 Growth-6&%5%7%Source:Glenigan.f=forecastCIVIL ENGINEERING 26 24 5 25 7 26 Government aims to expedite energy project delivery Funding approved for the HS2 tunnel to London Euston Ongoing major projects like HS2 continue to support the sectors activity 41 CHART 17:Value of Civil Engineering Main Contract Awards by MonthFUTURE OF THE SECTORProject starts in the civil engineering sector are expected to grow steadily over the next two years,driven by utilities projects.Utility starts are likely to strengthen in 2025 as water companies begin implementing their investment programs.The expansion of fibre-optic broadband across the UK will also contribute to sector growth.Water companies have proposed doubling capital investment to 96 billion for AMP8,the next five-year control period,which includes projects such as new reservoirs and river quality improvements.While the regulator may scale back some plans,a substantial increase in water industry investment is expected.Energy investment is set to grow,with a focus on renewable energy and grid enhancements to support Net Zero goals.This includes both major projects,like offshore wind farms,and smaller developments,such as onshore wind and solar PV projects.Additional short-term funding,including 500 million for road repairs,is expected to support a 5%rise in infrastructure starts in 2025.The green light for the HS2 rail tunnel to Euston and the Governments commitment to key rail projects like the TransPennine route upgrade and East-West rail link will further support long-term sector activity.The upcoming Spending Review will provide clarity on the funding and timeline for these projects.Source:Glenigan100m Under 100m201920202021202320222024JanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulAprJulOctJan million4,5004,0003,5003,0002,5002,0001,5001,000500042 CIS is the leading provider of business intelligence to the Northern Ireland and Republic of Ireland construction industry and was acquired by Glenigan in 2021.ECONOMIC CONTEXTAfter many years of external shocks to the economy,Ireland appears to be entering a period of relative calm.Inflation rates in Ireland have reduced to levels commensurate with stability,with the resultant real wage growth being reflected in increased consumer spending.The economy is operating at full employment.Boosted by net inward migration,employment continues to grow,but bottlenecks remain in the construction industry in the areas of housing and infrastructure.In September 2024,the seasonally adjusted unemployment rate was 4.3%,which was down from a revised rate of 4.4%in August 2024.On an annual basis,the seasonally adjusted unemployment rate fell to 4.3%in September 2024 from a revised rate of 4.5%in September 2023.Externally,GDP,driven largely by foreign-dominated sectors,will contract in 2024 by 0.4%followed by a recovery to a growth rate of 2.5%in 2025.Despite a notable decline in headline investment levels,the overall outlook remains positive for the Irish economy.Real wage growth is expected to continue,interest rates are predicted to decline further and demand for labour is strong.The ESRI Nowcast October report estimates that Modified Domestic Demand(MDD)is growing at 3%year-on-year,driven primarily by tax revenue and house price growth.MDD is regarded as a more accurate measure of underlying Irish economic performance.There are some notes of caution however as outlined in the governments Summer Economic Statement:Geopolitical tensions make for an uncertain outlook.While the headline position remains positive,public finances remain heavily reliant on volatile windfall corporate tax receipts that are not linked to the domestic economy.On an underlying basis,i.e.excluding windfall receipts,a deficit is in prospect again this year.Over the medium term,the“4Ds”demographic change,decarbonisation,digitalisation and deglobalisation will have profound implications for public finances.Limiting the exposure of the public finances to concentration risk and helping future Governments address the structural challenges on the horizon is at the heart of the Governments decision to establish the Future Ireland Fund and the Infrastructure,Climate and Nature Fund.REPUBLIC OF IRELAND43 CONSTRUCTION STARTSData included to end of Q3 2024,Forecast data for Q4 2024 to 2026Construction starts in Ireland are already at record levels in 2024.At the end of the third quarter,starts,at 13.4bn,have surpassed the total value of starts in 2023(11.6bn).This sharp rise in on-the-ground activity is attributable primarily to the residential sector,where government-led incentives have prompted a huge rise in housing commencements.At the end of quarter three this year,55,000 new housing units had commenced,already surpassing last years record high of 33,000.In the non-residential sector(excluding Civil),starts this year are projected to rise by nearly 30fore steadying off again.The Civil sector looks set to record a 49ll in investment which reflects the erratic nature of this sector which is skewed by large scale infrastructure projects.Source:CIS&Glenigan.f=forecastTABLE 3:Value of Underlying Project Starts(under 100 million)by Sector million20232024f2025f2026fAGRICULTURE56596062CIVIL AND UTILITIES2,3481,2001,2501,275COMMERCIAL795438440470COMMUNITY AND SPORT182263275280EDUCATION422273320365HOSPITALITY99375385410INDUSTRIAL1,2801,1681,1001,200MEDICAL3081,521435441RESIDENTIAL6,10412,0004,5005,500ALL11,59417,2968,76510,003Annual Change20232024f2025f2026fAGRICULTURE-14%6%2%3%CIVIL AND UTILITIES90%-49%4%2%COMMERCIAL6%-45%0%7%COMMUNITY AND SPORT-12D%5%2UCATION-18%-35%HOSPITALITY-10(0%3%6%INDUSTRIAL3%-9%-6%9%MEDICAL-2994%-71%1%RESIDENTIAL16%-63%ALL18I%-49%Source:CIS&Glenigan.f=forecastTABLE 4:Growth in the value of Underlying Project Starts(under 100 million)by Sector44 RESIDENTIALThe current housing market in Ireland is marked by several key trends and challenges.House prices in Dublin,Cork,and Galway are still high due to strong demand driven by economic growth,job opportunities,and the presence of multinational corporations,especially in the tech and pharmaceutical sectors.This demand has kept prices rising,though at a more moderate pace compared to the post-pandemic surge.While demand is lower in rural areas,there is growing interest in picturesque regions and those in proximity to urban centres.However,price growth in these areas is more restrained due to limited job opportunities and infrastructure.The affordability gap is significant,especially in the Greater Dublin Area.Despite efforts to increase housing construction,the supply of new homes is not meeting the demand.This shortage is exacerbated by a skills gap in the construction sector,which hampers the speed at which new housing can be developed and the cost of materials.Many landlords are exiting the market due to complex rent legislation and low net rental returns.This has led to a contraction in the number of available rental units,pushing rents higher.Mortgage approvals for residential investment lettings have also declined,tightening the rental market even further.Historically,low interest rates have made mortgages more accessible,sustaining demand in the housing market.However,any future increases in interest rates could impact affordability and potentially cool the market.The Irish Government has implemented various measures to address housing affordability and supply issues.These include the Help to Buy scheme for first-time buyers and initiatives to promote higher-density developments in urban areas.The impact of these policies on the housing market is ongoing and being closely watched.The housing sector in Ireland is influenced by various initiatives,including a notable waiver of development contributions.This waiver,introduced to stimulate housing development,is a temporary,time-limited measure applicable to all development contribution schemes under the Planning and Development Act 2000.As a direct result,the end of Q3 2024 saw 55,000 new homes started,already surpassing the total of all starts in 2023(33k)by a significant margin,with a further increase expected before the waiver deadline expires at the end of the year.CHART 18:Housing Commencements by Residential Units(Data to Q3 2024)20192020202120222023202460,00040,00050,00030,00020,00010,0000Single DwellingsHousing and ApartmentsResidential Units21,00026,0005,00019,00024,0004,00025,00031,0006,00023,00028,0005,00028,00033,0005,00050,00055,0005,000Source:CIS Insights45 Investment levels were also high in this sector.By the end of Q3 2024,869 new housing developments had started comprising over 45,000 units with a further 4,400 in self-builds.On the supply side,housing delivery is struggling to keep pace with government targets.At the end of Q3 this year 20,000 new homes had been built.It will be challenging,to say the least,for the Government to reach its target of 33,500 new homes.20192020202120222023202440,00050,00030,00020,00010,0000ApartmentsSingle DwellingsScheme HousingResidential UnitsSource:CIS Insights14,4008,20027,3004,70012,7008,20024,8003,90017,00012,60034,5004,90012,60012,70030,0004,60016,30013,20033,9004,40024,60020,00049,0004,4002021202220232024Single DwellingsHousing and Apartments30,00020,00025,00015,00010,0005,00014,6004,90019,00021,0006,00027,00024,9005,50030,00015,8004,20020,0000Residential UnitsSource:CIS InsightsCHART 19:New Investment in the Residential Sector by Volume of Units(data for 2024 is to Q3 only)CHART 20:Housing Completions(data to Q3 2024)46 Government initiatives to boost supply,outlined above,have had the desired effect on housing commencements and we expect this to be reflected on the supply side in 2025 and 2026 based on the waivers completion deadline.However,this front-loading of supply coupled with lower levels of pipeline planning looks likely to have a significant impact on commencements in 2025 and 2026 and as such we foresee a significant decline in starts in these years before recovering to more stable rises in future years.Regardless,the pressure to supply new homes will continue unabated and investment levels look set to rise for the foreseeable future.47 Global players in the pharmaceutical industry are continuing to engage with domestic contractors,who are offering innovative construction solutions responding to the advancing needs of research and development in the areas of new product expansion,retrofitting,and sustainability.In May 2024,Walls Construction commenced works on the 200 Million Diageo Brewery Development,Newbridge,County Kildare.The project will bolster the local economy by being the second largest brewing operation in Ireland creating 1,000 construction jobs and the creation of a further 70 permanent jobs when operational.By embracing innovation,fostering collaboration,and prioritising sustainability,contractors,and suppliers in construction can drive growth and position themselves as leaders in the Irish industrial sector.This necessitates a focus on delivery excellence and implementing strategic recommendations to address challenges like supply chain disruptions,labour shortages,and the need for sustainable practices.After an initial decline in new starts in 2024,the sector is forecast to grow steadily over the next two years.The pipeline of planning applications submitted and approved remains strong.PRIVATE NON-RESIDENTIALINDUSTRIALIncluding Data Centres,Manufacturing,Warehousing and Logistics and PharmaAs a vital contributor to the countrys economic development,the industrial sector provides the necessary infrastructure for sustained enterprise,manufacturing,and logistics which all feed back into economic growth.In 2024,industry stakeholders must navigate a complex environment marked by supply chain disruptions,labour shortages,and the pressing need for sustainable practices in planning and construction.CHART 21:Industrial Sector Investment02015201620172018201920202021202220232024202520262004006008001,0001,2001,4001,600 millionsStart YearSource:CIS Insights48 Theres a growing emphasis on sustainable building practices,with many new projects aiming for green certifications like LEED or BREEAM.This includes the use of eco-friendly materials and energy-efficient designs.Like many sectors,challenges such as labour shortages,working environments,consumer buying behaviour,rising material costs,and regulatory hurdles are still providing blockers to consistent activity levels.Recent global supply chain issues have also impacted project timelines and budgets.Significant public and private infrastructure projects are underway,aimed at improving transport links and urban development,which will further stimulate commercial construction.COMMERCIALIncluding Office and RetailThe slowdown in commercial activity looks set to continue with low and declining levels of investment and a less-than-buoyant pipeline.This sector is driven primarily by the office market which is still seeking to define itself post-pandemic.Project starts are at their lowest since 2019 and we estimate the value of new investment in the sector will fall by 45%in 2024 compared with 2023.The pipeline too is muted reflecting the uncertainty.The sector is expected to emerge from this lull,however,by redefining the office environment to offer a more enticing place of work.CHART 22:Commercial Sector Investment2004006008001,0001,2001,4000Source:CIS Insights millions201520162017201820192020202120222023202420252026Start Year49 HOSPITALITYIncluding Hotels,Restaurants,BarsDemand for hotel rooms in Ireland is on the rise and the Irish Tourism Industry Confederation has already voiced concern that the number of rooms being built will not meet the projected demand going forward in the next decade,so more needs to be done.Figures released in early 2024 by the Dublin Airport Authority show that over 31 million passengers passed through the terminals of Dublin Airport in 2023 60%higher than they were a decade ago.Investment in hospitality and leisure services in Ireland remains key despite many challenges including a lack of hospitality staff,wage increases,and increases in food and energy costs.Given the rising demand and increased consumer spending,we expect investment in the hospitality sector to continue in an upward trend.In 2024,investment in new hotels,bars,etc.,rose by 240%from 2023.At the end of Q3 2024,construction has already begun on 40 new projects which will deliver 2,235 new hotel beds outstripping the 644 beds brought to the market last year from new developments.The pipeline of projects in planning remains healthy with plans submitted to date comprising 2,338 new beds and planning grants for 1,569.CHART 23:Hospitality Sector Investment1002003004005006000Source:CIS Insights millions201520162017201820192020202120222023202420252026Start Year50 SPORT&SOCIALIncluding Sports and Leisure Facilities,Churches and Community Centres and Public BuildingsLocal authorities often partner with sports clubs and community organisations to fund and build new facilities.The continuation of Initiatives like the Sports Capital Grant and Equipment Programme provide much needed funding for local projects.While there are many opportunities,challenges remain,including funding constraints,planning regulations,and ensuring accessibility for all.Early this year it was announced that funding of over 20 million will be available under the Town and Village Renewal Scheme for regeneration projects in rural towns and villages in Ireland.Since being established in 2016,the Scheme has approved over 177 million for almost 1,800 projects across the country.Project starts in 2024 are set to rise by over 40%compared with 2023 and we see a continued steady rise in the years ahead reflective of a healthy pipeline.CHART 24:Sport and Social Sector Investment1002003004000Source:CIS Insights millions201520162017201820192020202120222023202420252026Start Year51 EDUCATIONIncluding Schools,High Education,and NurseriesThe education sector has experienced an ongoing backlog of projects awaiting approval from the Department of Education.There is a growing demand for new schools and educational facilities due to rising student populations and demographic changes.During the first quarter of 2024,the Government revealed plans to roll out the next phase of the Department of Educations building plan.In late summer,it was stated that 90 school buildings that are currently at the tender stage will see approval being secured to proceed to the next stage.This is being carried out from 2024 to 2025.Many existing educational facilities are undergoing upgrades to meet modern standards,including sustainability initiatives and the integration of technology.Some projects are being delivered through PPPs,such as the Devolved Schools Bundle and the Higher Education Bundles,which help accelerate development while sharing financial risks.The sector faces challenges such as supply chain issues,labour shortages,and inflation,which can impact project timelines and budgets.Overall,the education construction sector in Ireland is seeing a push for improvement and expansion,aligning with both government priorities and community needs.CHART 25:Education Sector InvestmentAs expected,new investment in education has slowed in 2024 given the issues highlighted above.Starts are projected to fall by 35%in value this year but the pipeline remains steady,and many delayed contracts will soon begin again pointing to steady growth.New school developments this year will deliver approximately 650 new classrooms.Chart 25:Education Sector Investment1004003002005006000Source:CIS Insights millions201520162017201820192020202120222023202420252026Start Year52 MEDICALIncluding Hospitals,Nursing Homes,Medical Centres and SurgeriesConstruction in the medical sector in Ireland has seen significant growth in recent years,driven by increasing demand for healthcare services and infrastructure.There has been substantial investment in new hospitals,clinics,and specialised medical centres at both the pipeline and delivery stages.The private healthcare sector is also expanding,with new facilities and services being established to meet the needs of a growing population and an aging demographic.Modern medical construction projects increasingly incorporate advanced technologies,including telehealth capabilities,smart building technologies,and sustainability measures.Starts in this sector rose significantly in 2024,due in large part to the 800m National Maternity Hospital in Dublin.Growth is expected to continue at a steady pace in the years ahead to match demand,and the planning pipeline is healthy enough to support rising demand for now.CHART 26:Medical Sector InvestmentChart 26:Medical Sector Investment5002,0001,5001,0002,5003,0000Source:CIS Insights millions201520162017201820192020202120222023202420252026Start Year53 CIVIL AND UTILITIESThe civil engineering sector is crucial to Irelands economic development,providing essential infrastructure for housing,commerce,connectivity,and sustainable communities.In 2024,the sector stands at a pivotal juncture,poised for growth and transformation amidst a rapidly evolving landscape.Addressing these challenges is crucial for the sector to deliver on its growth potential,meet critical infrastructure requirements,and address the ongoing housing crisis.As the sector navigates challenges such as supply chain disruptions,labour shortages,and the increasing need for sustainable practices,industry stakeholders will seek to embrace strategic initiatives throughout project lifecycles.Early involvement by contractors and the adoption of innovative solutions are essential to effectively address rising costs,funding approval issues,supply chain constraints,and skills shortages.The adoption of modern construction methods,offsite manufacturing,and digital technologies will be essential to improve productivity and reduce project costs.Project starts in 2024 are projected to fall by 49%following the very high level of investment in 2023,which included the 1bn investment for the Celtic Interconnector.However,steady growth is set to continue in future years in line with the governments strategic plans.CHART 27:Civil and Utilities Sector Investment5002,0001,5001,0002,5000Source:CIS Insights millions201520162017201820192020202120222023202420252026Start Year54 The construction sector is set for gradual market improvement over the next two years,driven by a more positive economic outlook and new government initiatives in education,health,and social housing.Additionally,there are ambitions to attract investment into energy infrastructure and emerging growth industries.TARGETING NEW GROWTH AREAS An improving economy and new government policies will shift construction activity across different sectors and regions.Structural changes are opening new opportunities in warehousing&logistics,office refurbishments,and repurposing redundant commercial premises.Reforms to planning regulations are expected to support a gradual increase in both private and social housing developments over the next two years.While a government review of capital programmes post-election has delayed some projects,increased capital funding in the Budget should allow these delayed projects to proceed in 2025.Firms should be ready to pivot towards emerging opportunities to keep their workflows steady.Regionally,construction in the north of England is forecast to outperform London and the south as government funding is redirected to economically weaker areas.To make the most of these shifts,firms should focus on building expertise and resources for new markets and regions.FACTORING IN SUPPLY-SIDE CONSTRAINTSWhile material availability and price inflation have stabilised,costs remain high for some products,and contractors should stay alert to possible supply interruptions,especially from overseas.Labour supply has temporarily stabilised with the average earnings rise dropping below 4%.However,this may be short-lived as skills shortages and labour costs are expected to increase with stronger sector growth from 2024.Additionally,the newly announced National Insurance rise will add 2%to labour costs,which firms should consider when planning project bids.MITIGATING RISKSupply chain disruptions over the past two years have lengthened project schedules,impacting workload,turnover,and cash flow.For example,the construction phases of projects completed in 2023 were,on average,15%longer than those finished pre-pandemic.With additional delays due to new regulatory oversight under the Building Safety Act,firms may experience further setbacks in stage payments and in the timely completion of late-stage work.To mitigate these effects,contractors might consider distributing their workforce across more projects to balance out lower revenues per site.Given the rise in insolvencies,firms could reduce risk by diversifying their client base and ensuring a wider pipeline to protect against financial or contractual challenges with any single client.Similarly,supply chains should be evaluated to avoid over-reliance on a limited number of suppliers.KEY RECOMMENDATIONS for the Construction Industry over the Next Two Years55 ON-SITE EFFICIENCY AND COLLABORATIVE WORKINGWhile supply disruptions are expected to ease,skilled labour shortages will likely remain a significant challenge.The sectors workforce has been reduced due to lower access to EU labour,post-pandemic shifts to other industries,and early retirements.Although the current slowdown in activity may provide short-term relief,firms should plan for skilled labour shortages that could drive up costs and delay project delivery.The Building Safety Act is also changing how projects are managed,particularly high-rise and high-risk residential structures.The Act mandates a more detailed pre-construction design and planning process,increasing the cost and risk of changes made during construction.This shift presents an opportunity to leverage offsite manufacturing and prefabricated systems,reducing on-site labour demands.Investing in improved design solutions,site management practices,and offsite options will be critical to completing projects efficiently and profitably.Many firms may find that this requires a more collaborative approach and the adoption of digital tools to streamline workflows and minimise waste.ADOPTING DIGITAL SOLUTIONS AND PROCESSESThe pandemic accelerated the adoption of digital solutions across pre-construction and on-site processes,as traditional work practices were disrupted.Investing in customer relationship management(CRM)systems,digital marketing,and sales process improvements can help firms identify and target emerging opportunities more effectively.Embracing digital tools can also cut business costs,improve efficiency,and enhance profitability,supporting a more resilient and agile approach to future market challenges.Glenigan November 2024This report is copyrighted.Information contained herein should not,in whole or part,be published,reproduced or referred to without prior approval.Users may download and print extracts of content from this report for their own personal and non-commercial use only.Brief excerpts may be used,provided full accreditation is given to Glenigan.Republication or redistribution of Glenigan content is expressly prohibited without the prior written consent of Glenigan.Disclaimer:This report is for general information purposes only.It should not be relied upon as a basis for entering into transactions without seeking specific,qualified,professional advice.While facts have been rigorously checked,Glenigan can take no responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this report.Do you need reliable insight and statistics to help you budget,forecast,realise size of market or penetration?Do you need a better understanding of your competitors activities,or would you like to see the trends shaping the future of construction?Contact us today to discuss your strategic business requirements:Call 0800 060 8698Email Visit 80 Holdenhurst Road,Bournemouth BH8 8AQ
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Featuring insight directly from industry thought leaders:Bloomberg IntelligenceConstructionIndustry ForecastFor the UK and Republic of Ireland2025-2027June 2025Business Intelligence for the UK Construction IndustryThe UK construction industry is facing a complex future,with a mixed outlook for recovery.Construction businesses need to be able to make informed decisions quickly and efficiently to navigate this complexity.Glenigan Analytix is a business intelligence platform that provides construction businesses with the insights they need to succeed.Our platform integrates data from planning applications,main contract awards,and start on-site to deliver a self-serve business intelligence environment that empowers users to interrogate and customise data to address their unique business needs.With Glenigan Analytix,you can:Track market trends and identify new opportunities Make informed decisions about where to invest resources Reduce risk and avoid costly delaysGlenigan Analytix is built on the UKs most comprehensive and up-to-date construction data,trusted by the ONS,government,and leading media.SIGN UP FOR A FREE DEMO TODAYAnd see how we can help you improve your Insights 4Economic Background 5Executive Summary 7Reform and delivery:DeHavilland.12Recovery Persists:Bloomberg 14Planning for Opportunity:KPMG 16Private Housing 18Social Housing 21Industrial 24Offices 27Retail 30Hotel&Leisure 33Education 36Health 39Civil Engineering 41Republic of Ireland 44Key Recommendations 54ContentsWritten by Allan WilnEconomics Director30 years experience in providing insightful market analysis and forecasts on UK construction and the built environment that can inform companies business development and market strategies.Irish section written by Pat McGrathInsights Manager IrelandPat has worked in the industry for many years providing market insights.He works closely with government bodies and customers on projects to provide strategic insights and analysis across various sectors.Co-written by Yuliana IvanykovychSenior EconomistYuliana contributes to Glenigans monthly industry reports through detailed research and analysis.She also works closely with clients,offering expert insights to support their strategic decision-making processes.AuthorsCo-written by Drilon BacaEconomistDrilon provides analysis and insights for Glenigans monthly industry reports.He collaborates with clients to deliver tailored data and expertise,helping to inform their strategic decisions.Construction Industry Forecast|UK and Republic of Ireland4Glenigans bespoke research service provides construction industry businesses and sales leaders with actionable,data-driven insights,specifically tailored to expand their business pipeline.Our team is led by Allan Wilen,a highly respected construction industry expert with over 30 years of experience in market analysis and forecasting.Together with our Economics Unit,Allan brings a wealth of expertise on the UK construction and built environment markets.With a background that includes 20 years as Economics Director at the Construction Products Association,Allan continues to deliver valuable insights and in-depth market analysis.Supporting him are Yuliana Ivanykovych and Drilon Baca,two seasoned economists who provide rigorous research and analysis,enabling hundreds of businesses each year to make informed strategic decisions.Glenigans analysis is trusted by industry bodies and widely respected across thousands of construction businesses,from large infrastructure organisations to smaller enterprises.Featured in leading media,our market analysis team is the UKs go-to source of intelligence on the built environment.Our team of economists and analysts delivers custom research for commercial clients,government agencies,and trade organisations alike.From strategic forecasting to fully tailored reports,we provide the intelligence your organisation needs to plan confidently.Unlock the power of targeted insights with Glenigans bespoke research.Discover how we can support your growth aspirations here: Insightsto drive your construction strategy forwardConstruction Industry Forecast|UK and Republic of Ireland5Economic BackgroundAn improving UK economy and rising public sector investment are expected to lift construction activity over the next three years.The economy has returned to growth having stalled during the second half of last year.Economic growth is expected to accelerate further during the second half of this year and maintain momentum during 2026 and 2027.The UK economy is set to grow by around 1%in 2025,with rising consumer and government spending expected to be the main drivers.Above inflation wage increases,lower interest rates and improving consumer confidence are forecast to lift household spending and provide a boost to consumer related construction sectors including housebuilding.Rising business and public sector investment will take longer to gather momentum but are expected to provide increased support to construction from 2026.U.S.trade policy has had a detrimental impact on global trade and economic growth.Heightened geopolitical uncertainty has disrupted and deterred business investment including in the UK,tempering the anticipated recovery in economic growth and business investment.Whilst lower interest rates and brightening economic prospects are forecast to support some recovery in industrial and office construction this year,a firmer and broader strengthening in business investment,including in construction,is anticipated from 2026 as strengthening economic growth lifts business confidence.Public funded investment was disrupted last year by the General Election and the subsequent post-election review of existing programmes by the new government.Subsequent spending commitments for 2025/26 in the Budget and Spring Statement have provided greater clarity and should enable government departments to progress existing projects during 2026.The Governments long-term funding commitments and priorities,as outlined in the Spending Review,are expected to support stronger public sector construction activity in the second half of the forecast period.These forecasts are built upon the analysis of Hubexos database of current and planned construction projects which have been examined alongside other market and economic variables.The key assumptions around which the forecasts are based include:A gradually improving UK economic outlook and lower borrowing costs support a progressive strengthening of private sector investment over the forecast period for non-residential sectors as geopolitical turbulence eases.A strengthening in real household incomes,together with an easing in interest rates support a recovery in housing market turnover and private housebuilding activity.The Spending Review funds increased public sector construction activity during the second half of the forecast period.The Governments renewed commitment to delivering net zero accelerates investment in renewable energy and increases civil engineering starts.Construction Industry Forecast|UK and Republic of Ireland6Construction Industry Forecast|UK and Republic of Ireland7 Geo-political Instability:A strengthening in domestic demand,in particular consumer spending,will be the main driver for UK economic growth,amid heightened uncertainty in global markets generated by US tariff policy.Private Sector Projects:Residential project starts improved during the first four months of 2025,but the disruption to global markets has delayed the recovery in industrial and commercial construction.Public Sector Delay:Public sector projects have been disrupted as the Government reassessed programmes post-election.The Spending Review provides increased capital funding from 2026.Forecast Highlights:2025-2027 Outlook:Housing upturn:Increase in household incomes and lower interest rates lift housing market activity and private housebuilding.Industrial&Commercial:Expected to strengthen as UK economic growth gathers pace,supported by increased business investment.Public Investment:Increased funding in the Spending Review drives a rise in capital programmes during the second half of the forecast period.Key Drivers of Growth:Progressive recovery in private housing starts as rising household incomes and lower interest rates lift housing market activity and new house sales.Improved consumer spending lifts retail and hotel&leisure sector starts from 2026.Upturn in new office construction alongside continued investment in refurbishment and remodelling projects.Online retailing is a catalyst for renewed investment in logistics facilities over the forecast period.Increased public sector investment in education,health,and community&amenity during 2026 and 2027.Executive Summary0201620152017 2018 2019 2020 2021 2022 2023 20242025f 2026f 2027fQ1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q35,00010,00015,00025,00020,000 millionForecastActualConstruction Industry Forecast|UK and Republic of Ireland8Chart 1:Value of Underlying(under 100 million)Project-StartsSource:Glenigan.f=forecast.million20242025f2026f2027fPrivate Housing25,34627,33529,94835,314Social Housing7,8348,0748,7169,680Industrial5,2385,4245,8136,337Offices3,9414,5035,5395,949Retail1,8341,7021,9942,169Hotel&Leisure3,4683,4663,7803,890Education6,4325,2525,4405,639Health3,9553,6663,7944,116Community&Amenity1,9382,0002,0072,024Civil Engineering8,5038,8839,99110,232TOTAL68,49170,30677,02185,349Annual Change20242025f2026f2027fPrivate Housing-8%8%Social Housing-10%3%8%Industrial0%4%7%9%Offices-16#%7%Retail7%-7%9%Hotel&Leisure28%0%9%3ucation10%-18%4%4%Health20%-7%3%8%Community&Amenity29%3%0%1%Civil Engineering22%4%2%TOTAL0%3%Construction Industry Forecast|UK and Republic of Ireland9Source:Glenigan.f=forecast.Source:Glenigan.f=forecast.Table 1:Value of Underlying Project-Starts(Under 100 million)by SectorTable 2:Growth in the value of Underlying Project-Starts(Under 100 million)by SectorConstruction Industry Forecast|UK and Republic of Ireland10Private ResidentialImpending stamp duty increases from April provided an added impetus to housing market activity during the first quarter of this year as purchasers rushed to complete ahead of the tax rise.Although some retrenchment is expected in the second quarter,it is likely to be short-lived.Increasing household incomes,lower mortgage rates and a brightening economic outlook are expected to lift housing market activity during the second half of this year and during 2026.Improved market conditions helped to lift private housing starts during the first four months of 2025.Rising real incomes and further interest rate cuts are expected to further buoy house-buyers confidence over the next three years.Planning reforms are expected to release more development sites,supporting sector growth in the later stages of the forecast period.Private Non-Residential WorkThe industrial sector is forecast to return to growth from 2025.Demand for logistics space is expected to drive sector activity over the next three years as higher consumer spending is set to lift the demand for logistics and light industrial space from online retailers and third-party carriers.Retail construction will be slower to recover.In the near term,retailers face increased cost pressures due to National Insurance rises and the increase in the minimum wage.An overhang of empty retail premises is also expected to deter investment in new premises although it may also prompt landlords to refresh and repurpose existing excess retail space including shopping centres to create more mixed-use locations.Investment by deep discount supermarkets Aldi and Lidl remains a bright spot,with both chains continuing to expand their store networks.Hotel&leisure starts rebounded during 2024.Like retailing the hospitality sector is currently facing a marked increase in labour costs that is expected to squeeze margins and limit the funds available for investment near term.However,an improvement in households financial position is set to benefit the hospitality sector through higher consumer discretionary spending.This is expected to underpin a progressive strengthening in investors confidence and investment in the sector during 2026 and 2027.Office starts continued to decline last year,dropping by 16%as higher borrowing costs and an overhang of available floorspace prompted investors to defer planned projects.The sector is expected to return to growth from this year as lower borrowing costs renew investor interest.Although changing working patterns are reducing the overall demand for office space,they also remain an important driver for office refurbishment projects as landlords and occupiers remodel premise to support hybrid working.In addition,regulatory changes and growing demand for premium office space with a good environmental performance is forecast to generate retrofit and new build opportunities over the forecast period.Increased Government InvestmentThe General Election and subsequent review of capital programmes by the new government disrupted the flow of public sector project starts.Spending commitments in last autumns Budget and the Spring Statement will provide some support for departmental programmes during the current financial year,while the Spending Review has outlined longer-term funding plans for 2026 and 2027.A sharp increase in the Department of Educations capital funding over the last two years and action to tackle RAAC defective buildings helped drive a 41%leap in school building projects in 2023,with further growth seen during 2024.The Budget included increased capital funding for the school rebuilding programme during 2025/26 with the Government expecting 100 projects to start during the current financial year.The Budget also included additional capital funding for further education.Universities finances are under pressure from capped UK student fees and a sharp drop in overseas student numbers.This is forecast to curb university building projects over the forecast period.Health project-starts recovered last year following the disruption to programmes during 2023.The Chancellor unveiled increased capital funding for the NHS during 2025/26.Whilst non-construction areas such as technology and diagnostic scanners are priority areas,funding will also be directed at tackling RAAC and the repair backlog on the existing estate.The Spending Review has set out the Governments longer term spending plans and increased capital funding is expected to support renewed growth in 2026 and 2027.Construction Industry Forecast|UK and Republic of Ireland11Greater cost stability and increased government funding helped housing associations to increase their development activity last year.Further funding increases for 2025/26 are expected to lift project starts from the second half of 2025.A drop in student accommodation projects dampened overall sector starts last year.A partial recovery in student accommodation projects is anticipated over the next three years.A sustained rise in infrastructure projects is likely over the next three years.The Budget increased the near term funding for smaller scale projects such as road repairs.The Spending Review has set out a longer-term framework for increased investment in the road and rail networks during 2026,2027 and beyond.The utilities sector is expected to benefit from a rise in major project-starts alongside a broader strengthening in activity.The water industry has secured a substantial increase in water charges to fund a near doubling of investment programmes,reaching 104 billion over the next five years,to reduce pollution discharges,cut leakage,and build new reservoirs.Increased investment in renewable generating capacity and improvements to the grid are also expected to lift sector activity with government policy still focused on delivering net zero.Michael CameronLead Policy AnalystConstruction Industry Forecast|UK and Republic of Ireland12Reform and delivery:the new Government a year in This Government is close to marking its first year in office and they are continuing with the routine business of Government which was,arguably,lacking in previous years.While public attention may have shifted from the Governments planning agenda,the Planning and Infrastructure Bill currently progressing through Parliament is emblematic of a Government quietly pressing ahead with some fundamental reforms.The Bill is the most significant planning reform in decades,designed to streamline infrastructure and new homes delivery and send a signal that the Government and the UK is ready to build.From bat tunnels to bulldozers Nothing has been more caricatured in the infrastructure space than the now-infamous“bat tunnel”on the HS2 route.Intended to protect a rare bat species,the 100 million mitigation scheme has become political shorthand for an over-regulated,over-permitted,and overly cautious development system.It has been cited by both the Housing Minister and the Chancellor as representative of a planning system that affects growth.The Bill takes a direct approach to preventing a similar case from happening on future projects.It limits repeated judicial reviews and aims to deliver a new strategic rather than site level of environmental mitigation.A central ambition of the Bill is to realign environmental regulation with pro-growth planning.The new environmental delivery plans(EDPs)and the nature restoration levy have been framed as tools for compromise:offering strategic solutions to mitigate environmental harm while reducing the costly delays from site-specific challenges.The new EDPs are,however,yet another layer of environmental law on existing planning processes;the Bill ensures that the Habitats Regulations remain as the bedrock of environmental planning and they will only be discharged in specific circumstances.Not quite zoning but a step away from discretion Through the Bill,the Government is not abolishing Englands discretionary planning system,but is taking a step towards creating a more certain and rules-based system.The Bill will introduce spatial development strategies(SDSs)at the sub-regional level,in a move that seeks to extend the London Plan-format across the country.Though,similar regional strategies existed under the last Labour Government,and while some achieved moderate success in boosting housing numbers,the actual average delivery of 160,000-170,000 new homes per year between 1997 and 2010 fell short of the then Governments target of 240,000.The Government rejects the comparison,insisting that new SDSs will operate at the right scale to support development.Construction Industry Forecast|UK and Republic of Ireland13De-politicising planning?Perhaps the most politically charged element of the Bill is its reform of planning committees;it is one area where the Conservative Opposition in the Commons has been quick to criticise.With a national scheme of delegation deciding which applications go before planning officers or planning committees and wider local government restructuring creating larger councils,local communities could feel more distant from decision-making which affects their communities.Seeking an economic boostThe Governments political hopes for this Bill are clear:it wants the Office for Budget Responsibility to formally recognise its planning reforms as growth-enhancing,and they are one step on the way there.At the Spring Statement,the OBR forecast that changes to the NPPF are set to increase housebuilding to the highest level in 40 years.The OBR forecast 1.3 million new homes will be built across the UK in this Parliament(compared to a 1.5 million new homes target for England).Getting the OBR to similarly recognise and positively forecast the reforms in the Planning and Infrastructure Bill is the Governments next challenge.That would be welcome for the Governments growth agenda,but the OBR will need convincing that any development unlocked by the Bills reforms is genuinely“additional”,and not simply an accelerating of existing development pipelines.Without a positive OBR forecast,the Bill may end up more political than practical.Conclusion:planning at a crossroadsThe Planning and Infrastructure Bill is both an evolution and a gamble.It builds on long-standing cross-party concerns,including on judicial review delays,fragmented spatial planning,and environmental constraints,but puts them into a single piece of legislation and reforms the planning system,arguably,more than any Government in a generation.The months ahead will be crucial.As the Bill continues through Parliament and key secondary legislation is drafted,the Governments growth agenda will be tested by the realities of place and politics.Michael Cameron,Lead Policy Analyst,DeHavilland Michael specialises in housing,construction,and local government policy within the infrastructure policy team at the political monitoring company DeHavilland.Interested in finding out more?Visit dehavilland.co.uk to find out more about how DeHavilland can help your organisation.Iwona HovenkoSenior Equity Research AnalystBloomberg IntelligenceConstruction Industry Forecast|UK and Republic of Ireland14Recovery Persists Despite Risks:UK Housing OutlookRecovery to Resume After Pause;Prices Back at 2022 Peak A steady UK housing recovery could continue after the end of the stamp duty land tax(SDLT)holiday,with homebuilders and property portal Rightmove pointing to demand resilience despite the near-term softening flagged by the Royal Institution of Chartered Surveyors.Sales agreed in May were up 5ove the prior year period,according to Rightmove,with signs of better demand after an April dip,following the end of the SDLT holiday,and price indices show property values are now largely back to their 2022 peak.Less-punitive mortgage affordability checks and the lowest rates in years could also lure buyers.For the first time since 2021,two-year fixed-rate deals are now cheaper than five-year ones,which might tempt buyers hoping for lower rates ahead,who were previously unsure about fixing for a long period.Housing Helped by Low Rates Despite Bumpy Path Down UK mortgage rates are supportive of housing activity despite elevated levels,after they fell sharply from 2022-23 highs and remain below levels seen in 2023 and most of last year.Based on price-comparison site data more timely than that from the Bank of England rates have fallen below their recent low in October.This could drive housing activity,alongside pent-up demand after potential buyers paused plans amid high rates in 2023-24.Expected Bank of England rate cuts could support further mortgage-cost reductions,though the path there could be bumpy and slow,with limited scope for steep declines in the near term.Swap rates climbing again,even if only relatively modestly,could curb the scope for mortgage-rate declines in the near term,or even push them slightly higher.Thats after mortgage costs fell to the lowest level in a long time,which absent any shocks or surprises could imply that they are as good as they get for a while.Lessening concern about tariff-driven damage to the UKs economy and a moderating disinflationary outlook have curbed expectations of further Bank of England(BOE)rate cuts,even if rate forecasts are more dovish than just a few months ago.After Turbulent 2022-23,Mortgage-Rate Swings ModerateThe path for mortgage rates has been very turbulent,and may remain bumpy going forward as fiscal policy,base effects,geopolitics and external factors shift expectations regarding inflation,growth and central banks rate setting trajectory.Notably though,volatility has moderated,which given the resilience and prior strong wage growth(though possibly easing now on payroll tax hikes)could support a steady,if modest,housing activity improvement.Thats as buyers confidence may remain fragile amid domestic and global uncertainty.Construction Industry Forecast|UK and Republic of Ireland15New-Home Volume May Worsen Before Getting BetterPlunging 2024 UK housing starts suggest completions may decline before theres any boost from higher demand and success in the governments push to lift volume.The setback is clear on a rolling 12-month basis,suggesting a rush of starts ahead of stricter rules from 3Q23 wasnt the only reason.Muted 2023-24 activity,paused land buying,high costs and weak price growth,with a lack of incentives for new homes also offer explanations.Yet planning delays which plagued homebuilders,especially smaller ones may now be dissipating,with developers more upbeat about the increasing ease of getting permits,which may help lift future homebuilding volume.Despite economic angst,Persimmon,Bellway and Taylor Wimpeys 2025 updates flag a steady demand revival with more reservations and orders that may also lift completions.In early 2023,Centre for Cities estimated the UK had a backlog of 4.3 million homes,based on the rate of homebuilding in the rest of Europe.The think tank suggested that even reaching the governments goal of building 300,000 homes a year would take a century to catch up with the rest of Europe.The ramping up of annual construction volume to 442,000 homes a level never reached before would only clear the backlog in 25 years and 654,000 homes per annum would be needed to close the gap in the next decade.The rising UK population set to increase by 9 million in the 25 years to 2047,based on the Office for National Statistics could further worsen the UKs housing shortage.That implies a need for at least 4 million more homes,given current average household size.The sharpest rise is expected in England(14.5%)and Wales(12.9%).Londons population is likely to rise by about 1 million in the same period.BTR may offer an important lever to lift housing supply,helping add new multi-and single-family rental homes.Iwona Hovenko,Senior Equity Research Analyst,Bloomberg Intelligence Iwona Hovenko is a Senior Equity Research Analyst with Bloomberg Intelligence.She covers European housing,with a focus on the UK market,looking at the companies operating in that space,as well as the wider industry trends.Interested in finding out more?Visit DroverAssociate Director,Major Project Advisory KPMG in the UKPlanning for Opportunity:Building Momentum in the Construction IndustryThe construction industry is entering a period of renewed optimism and upward momentum.The latest Glenigan forecast signals an uplift across both the UK and Irish markets,echoing findings from the 2024/25 KPMG Global Construction Survey,where over two-thirds of industry respondents anticipate growth and expansion.Our latest market insights also point to a significant opportunity:nearly$100 trillion USD is expected to be invested in global infrastructure annually by 2040.While this level of investment presents vast potential for infrastructure growth,challenges remain in accessing the market at scale.Delivery continues to be hindered by an aging skilled labour force with insufficient replenishment,persistent strains on supply chains,and capacity limitations.Yet despite these headwinds,the industry is actively preparing for the futureplacing increased focus on strengthened market strategies,transformative business models centred on people,and technology-led innovation to support sustainable growth and talent retention.Planning for the futureNotably,the KPMG global construction survey indicates,while over 70%of the industry expects to realise substantial gains from technological advances,fewer than half have adopted the tools necessary for automation in foundational areas such as reporting,programme planning,and performance monitoring.These elements are critical building blocks to unlocking the broader benefits of innovation.To address continued volatility and position for long-term success,the industry is prioritising improved estimating accuracy,risk transfer,and accelerated innovation.But none of these priorities can be achieved without a fundamental focus on planning.As we look to the months ahead,three planning priorities stand out:1.Pipeline intelligence and programme planning2.Planning permissions and approvals3.Transformation planning and integrationInnovation In ActionTo support these focus areas,we have seen the development and adoption of a range of technologies,innovations,and automation tools aimed at driving measurable improvement.Pipeline insight and commercial strategy:Enhanced programme and pipeline intelligence tools are helping the industry plan ahead,reduce uncertainty,and drive commercial valueunlocking up to 30%cost savings and significant improvements in market capacity compared to traditional models.Construction Industry Forecast|UK and Republic of Ireland16Accelerated planning approvals:Through computational modelling and GIS integration,planning permission timelines on major development projects have been reduced by up to 80%dramatically improving market responsiveness and speed to delivery.Transformation execution and performance tracking:Improved data transparency,automation,and AI integration now allow organisations to track performance and outcomes in real-time,enabling evidence-based decisions and measurable progress against transformation objectives.The Longview:Transformation as an investmentWe are seeing more organisations make upfront capital investments in digital transformationrecognising that long-term returns on investment,productivity improvements,and resilience are grounded in the integration of strategic planning,technology,and operational performance.As AI and advanced analytics continue to surge in relevance,the need to organise,baseline,and qualify internal data has never been more critical.This foundational work is essential to realise the full value of AI and digital tools.However,as adoption increases,a new challenge is emerging:the technology sector may soon feel pressure to keep pace with growing demand from construction.Organisations are ambitiously setting 12-month goals to implement change,often while continuing to deliver business as usual.In this new era of opportunity,success will not just depend on optimismbut on execution.Those who plan,invest,and transform today will be best positioned to lead the construction industry into a more resilient and productive tomorrow.KPMG is a global network of professional firms providing Audit,Tax and Advisory services.In the major projects advisory team,we are a market leader in partnering with clients to maximise value through significant capital investments and complex transformations,working across projects,programmes and portfolios.Our multidisciplinary,diverse,outcome-focused team of 100 industry experts are driven by purposeful work to achieve positive change for our local communities and make a lasting global difference.Krystle Drover,Associate Director,Major Project Advisory KPMG in the UK Krystle is a professional engineer with 20 years of industry experience leading in technical due diligence,industrialisation and innovation.She is recognised in the infrastructure and energy industries for her technical contributions accelerating routes to delivery,unlocking stranded projects and creating evidenced cost efficient innovative solutions.She is a recognised expert in project delivery,commercial,assurance and construction.She has experience in end to end programme management as well as,intellectual property creation and commercialisation.Interested in finding out more?Visit to find out more about how KPMG can help your organisation.Construction Industry Forecast|UK and Republic of Ireland17Private Housing Starts20242025f2026f2027f million25,34627,33529,94835,314Growth-8%8% 8 25 10 26 18 27Construction Industry Forecast|UK and Republic of Ireland18 Private housing activity to start recovering in 2025 after last years decline Growth will accelerate in 2026 and 2027 as market conditions improve Planning reforms to help with construction activityWhile 2024 saw a decline,the rush to avoid stamp duty increases boosted project starts in the first quarter of 2025.Strengthening economic growth and further interest rates cuts are expected to boost confidence in 2026 and 2027.Private HousingSource:Glenigan.f=forecast01,0002,0003,0004,0005,0006,0007,000South EastSouth WestLondonWest MidlandsEast of EnglandYorkshire&The HumberNorth WestNorth EastEast MidlandsNorthern IrelandWalesScotland20242025 millionConstruction Industry Forecast|UK and Republic of Ireland19State of the SectorThe economy started to stabilise last year,with inflation rates remaining under 3%for the majority of the year,leading to subsequent interest rate cuts.Confidence began to return to the housing market,with both the number of mortgage approvals and house price inflation growing during 2024.Despite this,the private housing sector faced challenges.Project starts decreased by 8%,with skills shortages and planning constraints delaying the delivery of projects and tighter building regulation adding to cost pressures.Impending stamp duty increases from April provided impetus to housing market activity during the first quarter of this year as purchasers rushed to complete ahead of the tax rise.Property transactions were up 25%in March on a year ago and annual UK house price inflation rose to 6.4cording to the UK House Price Index published by HM Land Registry.Whilst some retrenchment is anticipated during the second quarter,this is expected to be short lived.Increasing household incomes,lower mortgage rates and a brightening economic outlook are expected to lift housing market activity during the second half of this year Source:Glenigan.N.B.2025 data is based on January to April pro rataChart 2:Value of Private Housing Projects Securing Planning Approval10,00020,00030,00040,00050,000060,00070,00090,000100,00080,000Number of Units201920202021202220232024Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Up to 910-1415-4950-99100-249250-4991,000 plus500-999Construction Industry Forecast|UK and Republic of Ireland20The Future of the SectorThe Bank of Englands base rate currently stands at 4.25%and independent forecasts anticipate two or three further quarter point cuts by the end of the year with a further softening in rates during 2026.Combined with rising real incomes,the rate cuts are expected to further buoy house-buyers confidence and market activity during 2026 and 2027.The Government has set the ambitious target of 1.5 million new homes in England by 2029.It is pressing ahead with a number of planning reforms that are expected to help release additional sites for development,boosting planning approvals and supporting sector growth during the latter stages of the forecast period.Source:Glenigan.Chart 3:Private Housing Detailed Planning Approvals by Project Size (Number of Units) 3 25 8 26 11 27Social Housing Starts20242025f2026f2027f million 7,834 8,074 8,716 9,680 Growth-10%3%8%Construction Industry Forecast|UK and Republic of Ireland21Social Housing Progressive rise in social housing project starts over the forecast period Increased government funding will help boost new social housing provision and refurbishment projects A partial recovery in student accommodation projects over the next three yearsGreater cost stability and increased government funding supported housing association development activity last year.Funding allocation for 2025/26 announced in the Budget and Spring Statement is expected to lift project starts from the second half of 2025.Funding increases from the Government is expected to further boost sector starts during the latter half of the forecast.Student accommodation is now showing signs of recovery after the sharp fall in project starts last year.Source:Glenigan.f=forecast02004006008001,0001,2001,4001,600LondonEast MidlandsWalesSouth EastNorth WestNorthern IrelandNorth EastWest MidlandsYorkshire&The HumberEast of EnglandSouth WestScotland20242025 millionConstruction Industry Forecast|UK and Republic of Ireland22State of the SectorSector starts contracted 10%last year,dragged down by a sharp decline in student accommodation work after an increase the previous year.The change in government and high construction costs added to the pressures faced by developers.Apartments made up a smaller share of social housing starts last year,as housing associations shifted toward a greater proportion of low-rise developments.This reflects the disruption to high-rise project delivery following the implementation of the Fire Safety Act.Student housing also saw a sharp decline,as tighter visa rules deterred investors and reduced the number of international students coming to the UK.Source:Glenigan.N.B.2025 data is based on January to April pro rataChart 4:Value of Underlying Social Housing(under 100 million)Detailed Planning Approvals million20152016201720182019202020212022202320242025f 2026f 2027f6,0008,00010,0004,0002,0000HousingKey WorkersApartmentsStudent AccommodatonSheltered&Elderly Persons,HostelsConstruction Industry Forecast|UK and Republic of Ireland23The Future of the SectorSocial housing construction activity is expected to pick up over the forecast period.Increasing social housing provision will be a key part of delivering the Governments housing target of 1.5 million homes.Funding allocations announced in the Budget and Spring Statement are expected to strengthen housing association starts during the second half of this year.Additional funding commitments in the Spending Review are expected to support a strengthening in the development pipeline and subsequent starts during 2026 and 2027.Despite the additional restrictions on student visas introduced by the new government,a partial recovery in student accommodation starts is expected over the forecast period.Declining interest rates will ease cost pressures,and the demand for purpose-built student accommodation is likely to continue growing as buy to let investors exit the student rental market.Chart 5:Value of Underlying Social Housing Project-Starts (under 100 million)by YearSource:Glenigan.f=forecastIndustrial Starts20242025f2026f2027f million5,2385,4245,8136,337Growth0%4%7%9% 4 25 7 26 9 27Construction Industry Forecast|UK and Republic of Ireland24 Pick-up in industrial starts in 2025 after a period of stability in 2024 Improved economic and business conditions to lift sector activity over the next three years Light manufacturing and warehousing projects expected to drive growth over the forecast periodThe industrial sector is set to return to growth,after the recent period of consolidation.As investor confidence rises alongside improved economic conditions,we expect to see revived demand for logistics spaces.IndustrialSource:Glenigan.f=forecast million20152016201720182019202020212022202320242025f 2026f 2027f6,0007,0008,0004,0005,0002,0003,0001,0000Warehousing&LogistcsOtherManufacturingConstruction Industry Forecast|UK and Republic of Ireland25State of the SectorSector activity was stable in 2024,and the outlook for 2025 appears more optimistic.A combination of resilient demand for industrial spaces,recovering consumer confidence and an inflow of overseas investment is forecast to lift new project-starts in the sector.The demand for logistics space,driven by ongoing growth in online sales and the need for modern and efficient distribution centres is set to drive an increase in starts this year.The industrial and logistics sector is also expected to benefit over the forecast period from the new National Planning Policy Framework,which requires local authorities to identify strategic sites for local and inward investment,including suitable locations for gigafactories,freight hubs,and logistics facilities.Source:Glenigan.f=forecastChart 6:Value of Underlying Industrial Project-Starts (under 100 million)by YearThe Future of the SectorThe momentum built in 2025 is forecast to continue into 2026 and 2027,driven by improving economic conditions and sustained demand for industrial and logistics facilities.Overall growth will be primarily driven by light manufacturing and warehousing projects.The share of online purchases in the retail market remains above pre-pandemic levels and is expected to continue rising over the forecast period.Higher consumer spending is set to boost demand for logistics and light industrial space from online retailers and third-party carriers.Despite a slowdown in the development pipeline this year,developers and investors can advance a significant number of previously approved projects in the near term.Meanwhile,the new NPPF guidance is expected to help expedite approvals for new sites in response to growing demand for industrial floorspace.0100200300400500600700800Yorkshire&The HumberSouth EastLondonWest MidlandsEast of EnglandSouth WestWalesScotlandNorth EastNorth WestNorthern IrelandEast Midlands20242025Construction Industry Forecast|UK and Republic of Ireland26Source:Glenigan.N.B.2025 data is based on January to April pro rataChart 7:Value of Underlying Industrial Project Approvals(under 100 million)in 2024 and 2025 Pro-RataOffices Progressive rise in office sector activity over the next three years Advances in AI may boost demand for data centres Hybrid working remains popular,but office-based employment is expected to growThe office sector is expected to recover after a persistent decline caused by challenging economic conditions.Forecast to grow by 14%in 2025,improved economic conditions are expected to support further growth in the medium and long term.Source:Glenigan.f=forecastOffice Starts20242025f2026f2027f million 3,941 4,503 5,539 5,949 Growth-16#%7% 14 25 23 26 7 27Construction Industry Forecast|UK and Republic of Ireland2702004006008001,0001,2001,400LondonSouth EastEast of EnglandSouth WestNorth WestWest MidlandsEast MidlandsNorth EastYorkshire&The HumberNorthern IrelandWalesScotland20242025 millionConstruction Industry Forecast|UK and Republic of Ireland28State of the SectorOffice starts faced headwinds last year,declining 16%and extending the slowdown in 2023.Both the financial and professional services sectors have shed labour over the last year,curbing the demand for office spaces.Knight Frank report that,at 9.1%,a high proportion of central London office space remains vacant.While the development pipeline weakened during the first four months of 2025,with detailed planning approvals down by 33%compared to a year earlier,project starts have improved.The value of projects starting on site increased by 20%over the same period.This divergence indicates improved investor sentiment,with clients progressing previously approved projects that were deferred over the last two years.Source:Glenigan.N.B.2025 data is based on January to April pro rataChart 8:Value of Underlying Office Project Approvals(under 100 million)in 2024 and 2025 Pro-Rata million201720182019202020212022202320242025f2026f2027f6,0004,0005,0002,0003,0001,0000Starts ExtensionStarts Refurbishment OnlyStarts NewForecastConstruction Industry Forecast|UK and Republic of Ireland29The Future of the SectorHybrid working trends are projected to drive sector growth in 2025 and 2026,with new builds and refurbishments in demand.Office lettings were also reported to have increased in the first quarter of 2025 and office-based employment is projected to grow slightly over the next five years,pointing to a potential increase in demand for new office spaces.Although detailed planning approvals have slowed down,there is a healthy pipeline of approved projects ready for construction.We forecast the sector to grow 14%this year.Further firm growth is expected for 2026 and 2027.Premium offices have outperformed the market sector over the last three years.Growing demand for premium office space with a good environmental performance together with regulatory changes are forecast to generate retrofit and new build opportunities over the forecast period.Sector growth is expected to accelerate in 2026 before easing in the longer term.In October,Technology Secretary Peter Kyle announced a 6.3 billion investment in data infrastructure.As AI continues to advance rapidly,demand for data centres is expected to grow,further boosting overall sector activity.Chart 9:Value of Underlying Office Project Starts(under 100 million)by Type of Development WorkSource:Glenigan.f=forecastRetail Starts20242025f2026f2027f million 1,834 1,702 1,994 2,169 Growth7%-7%9%-7 25 17 26 9 27Source:Glenigan.f=forecastConstruction Industry Forecast|UK and Republic of Ireland30 Pressure on retailers margins is expected to dampen activity in the retail sector in 2025 Rising consumer spending lifts investment in 2026 and 2027 Growth expected to be led by shops and supermarketsThe retail sector is projected to see a decline in project starts this year.However,the sector is expected to return to growth in 2026 and 2027,as rising consumer spending lifts retailers confidence.Supermarkets and shops are likely to play a key role in this expansion.Retail050100150200250300350South WestNorth WestSouth EastScotlandWalesWest MidlandsNorth EastEast MidlandsNorthern IrelandYorkshire&The HumberLondonEast of England20242025 millionConstruction Industry Forecast|UK and Republic of Ireland31State of the SectorThe retail sector partially recovered in 2024,as a modest rise in consumer spending helped ease some of the pressures on UK retailers.Lidl also increased its store opening programme,having redirected investment towards strengthening its distribution network during the previous year.Sector starts grew 7%last year after a 13cline in 2023.Unfortunately,activity in the retail sector has slowed sharply during the first four months of 2025.Retailers are facing increased cost pressures from minimum wage increases and higher National Insurance contributions.The development pipeline has also weakened.Source:Glenigan.N.B.2025 data is based on January to April pro rataChart 10:Value of Underlying Retail Project Approvals(under 100 million)in 2024 and 2025 Pro-Rata million1,0001,5002,0002,5003,0005000201720182019202020212022202320242025f2026f2027fSupermarketsShopping CentresOther RetailShopsPetrol Filling StatonsRetail WarehousingConstruction Industry Forecast|UK and Republic of Ireland32The Future of the SectorThe decline is expected to continue throughout this year,with retail starts forecast to contract 7%.Detailed planning approvals are also projected to decrease.However,we expect the sector to recover in the medium term,with supermarkets and shops leading the growth.Last years Budget provided temporary relief for small businesses,with a long-term reform to lower business rates for high street retail,hospitality,and leisure properties starting in 2026-27.This support is expected to stimulate investment in retail space in the longer run.Lower interest rates will also help businesses obtain financing more easily.Competition within the grocery market also appears to be intensifying in response to Aldi and Lidls development programmes.Several retailers,including Morrisons,Tesco,Waitrose,and the Co-op,plan to open new stores in the coming years.Source:Glenigan.f=forecastChart 11:Value of Underlying Retail Project-Starts(under 100 million)by SegmentHotel&Leisure Starts20242025f2026f2027f million 3,468 3,466 3,780 3,890 Growth28%0%9%3%0 25 9 262027 3%Construction Industry Forecast|UK and Republic of Ireland33Hotel&Leisure Project starts will remain unchanged this year Higher labour costs squeezing hospitality industry margins and deterring investment Increased tourism to help drive growth in hotel&leisure project starts in 2026 and 2027Hotel&leisure project starts are forecast to plateau this year after strong growth in 2024.However,renewed growth is expected over the next two years,driven by robust consumer discretionary spending and increased tourism,which are encouraging greater investment.Source:Glenigan.f=forecast million1,0001,5002,0002,5003,5004,5003,0004,000500020182019202020212022202320242025f2026f2027fCafs,Restaurants&Fast FoodCinemas&TheatresHotels&Guest HousesSport FacilitesOther Hotel&LeisureIndoor Leisure FacilitesConstruction Industry Forecast|UK and Republic of Ireland34State of the SectorActivity in the hotel and leisure sector strengthened last year.Project starts grew 28%,in sharp contrast from the 2023 decline.Spending by overseas visitors increased alongside a rise in the number of visitors to the UK,encouraging a 33%rise in hotel project starts.Improving economic conditions also boosted consumers disposable income,encouraging increased spending.The sector initially experienced a strong start to 2025,however there was a decline in April.The pipeline has also been weakening.Source:Glenigan.f=forecastChart 12:Value of Underlying Hotel&Leisure Project-Starts (under 100 million)by Year02004006008001,0001,2001,4001,4001,600LondonSouth EastScotlandNorth WestWest MidlandsSouth WestEast MidlandsEast of EnglandYorkshire&The HumberNorthern IrelandNorth EastWales20242025Construction Industry Forecast|UK and Republic of Ireland35The Future of the SectorAlthough VisitBritain forecasts a 5%increase in visitors and a 7%rise in nominal spending,hotel and leisure project starts are expected to remain flat in 2025.Businesses are facing cost pressures from higher minimum wages and increased employer National Insurance contributions,alongside greater geopolitical uncertainty.However,an improvement in households financial position is set to help the hospitality sector through higher consumer discretionary spending.Along with the expected rise in overseas visitors,this is expected to support a gradual strengthening of investor confidence and increased investment in the sector during 2026 and 2027.The introduction of permanently lower business rates multipliers for high-street retail,hospitality,and leisure(RHL)properties in 2026-27 is likely to stimulate growth in hotel&leisure construction.This measure will reduce long-term operational costs,making investments in new developments,expansions,or upgrades more financially viable for businesses.Interest rates are also expected to ease further,which will make financing more accessible.Chart 13:Value of Underlying Hotel&Leisure Project Approvals (under 100 million)in 2024 and 2025 Pro-RataSource:Glenigan.N.B.2025 data is based on January to April pro rataEducation Starts20242025f2026f2027f million6,4325,2525,4405,639Growth10%-18%4%4%-18 25 4 26 4 27Construction Industry Forecast|UK and Republic of Ireland36Source:Glenigan.f=forecast Schools construction starts continue to dominate the education sector Increased funding in Spending Review lifts sector activity from 2026 Cash-strapped universities curb investment in higher education facilities Education starts are forecast to decline by 18%in 2025,following a 10%rise in 2024.While additional funding provided in last autumns Budget for the school rebuilding programme in 2025/26 will help stabilise school project starts,activity in other parts of the sector is expected to contract sharply this year.Modest growth of 4%is anticipated in 2026 and 2027,as further funding through the Spending Review supports increases in school building and further education projects.Education0100200300400500600700800LondonSouth EastScotlandNorth WestWest MidlandsSouth WestEast MidlandsEast of EnglandYorkshire&The HumberNorthern IrelandNorth EastWales20242025 millionConstruction Industry Forecast|UK and Republic of Ireland37State of the SectorSchool building projects account for around three-quarters of sector activity and are forecast to slip back 2%in 2025.Funding provided through the Governments 1.5 billion school rebuilding programme is expected to help keep school building projects at current activity levels,following two years of strong growth.More funding has also been allocated to address RAAC issues in school buildings.RAAC has been confirmed in 234 schools across England,with over 100 needing major refurbishment or rebuilding and the remaining requiring minor repairs.Source:Glenigan.N.B.2025 data is based on January to April pro rataChart 14:Value of Underlying Education Project Approvals (under 100 million)in 2024 and 2025 Pro-Rata Chart 15:Value of Underlying Educaton Project-Starts(under 100 million)by Yearf=forecastSource:Glenigan million2015201620172018201920202021202220242025f2026f2027f20238,0006,0007,0004,0005,0003,0002,0001,0000CollegesUniversitesOtherSchoolsConstruction Industry Forecast|UK and Republic of Ireland38The Future of the SectorThe education sector is set to return to growth in 2026 and 2027 after an expected 18cline in this year.The value of project starts declined sharply during the first four months of 2025.While government capital funding is expected to largely sustain school building works this year,university investment in higher education facilities is forecast to fall significantly in 2025.Increased government capital funding,rising to 6.7 billion for 2025-26,and greater clarity from the Spending Review are expected to unlock a new wave of education activity later in the forecast period,driven by major projects such as school rebuilding.In contrast,the university sector faces ongoing challenges.After a brief spike in 2024,university project starts are forecast to decline sharply in 2025 and remain subdued through the forecast period.Tuition fees for UK students,frozen since 2017,have been increased by only 3.1%for 2025/26.Additionally,tighter visa restrictions have reduced enrolments of higher fee-paying overseas students,creating financial strain that limits universities ability to fund new projects.Research by PwC for Universities UK says that a significant proportion of universities are vulnerable to these pressures.With no apparent increase in higher education funding,university construction is expected to remain under pressure.Source:Glenigan.f=forecastN.B.Excludes projects with a construction value in excess of 100mChart 15:Value of Underlying Education Project-Starts (under 100 million)by YearHealth Starts20242025f2026f2027f million3,9553,6663,7944,116Growth20%-7%3%8%-7 25 3 26 8 27Construction Industry Forecast|UK and Republic of Ireland39Health Increased funding is set to drive an increase in healthcare starts in the latter stages of the forecast period Decline in 2025 as projects are delayed on site Sector set to return to growth in 2026/27 supported by major schemes such as the New Hospital ProgrammeHealth project-starts recovered last year following the disruption to programmes during 2023.The Chancellor unveiled increased capital funding for the NHS during 2025/26.Whilst non-construction areas such as technology and diagnostic scanners are priority areas,funding will also be directed at tackling RAAC and the repair backlog on the existing estate.The Spending Review and the Governments 10-year NHS plan have outlined longer-term spending commitments,with increased capital funding expected to support renewed growth in 2026 and 2027.Source:Glenigan.f=forecast0100200300400500600700800South EastLondonWest MidlandsEast of EnglandSouth WestWalesEast MidlandsNorth WestScotlandNorthern IrelandYorkshire&The HumberNorth East20242025 millionConstruction Industry Forecast|UK and Republic of Ireland40State of the SectorProject starts in the health sector are expected to decline by 7%this year.While project starts rose 20%last year,the development pipeline contracted as the value of detailed planning approvals dropped by 18%.The progress of projects in the development pipeline was disrupted by the General Election and the new administrations review of existing programmes as it shapes its long-term strategy for the NHS.The need to recalculate costs for major projects such as the New Hospital Programme has also led to a slowdown in sector activity in 2025.Source:Glenigan.N.B.2025 data is based on January to April pro rataChart 16:Value of Underlying Health Approvals(under 100 million)by Year and RegionThe Future of the SectorThis disruption is now being reflected in project starts,which were down by 24%during the first four months of 2025 compared to the same period last year.However,the additional capital funding announced by the Chancellor in the Budget,raising NHS capital spending to 13.6 billion for 2025/26,is expected to boost sector activity in the second half of the year.This should partially offset the weak start and provide a solid foundation for growth later in the forecast period.The Spending Review and the Governments 10-year NHS plan have set out longer-term funding commitments from 2026/27 onwards.Increased capital investment is expected to support renewed growth in 2026 and 2027.Construction Industry Forecast|UK and Republic of Ireland41Civil Engineering Starts20242025f2026f2027f million8,5038,8839,99110,232Growth22%4%2% 4 25 12 26 2 27Civil Engineering Government to accelerate delivery of infrastructure projects Major projects such as HS2 set to support overall sector work Development pipeline boosted by major projects such as the Lower Thames crossingUnderlying civil engineering starts(under 100 million)are set to continue the positive trend experienced in 2024,increasing 4%in 2025.Growth is set to continue in 2026 and 2027.A sustained rise in infrastructure projects is anticipated as the Spending Review provides increased investment for the roads and rail networks from 2026/27.Utilities work is also expected to grow strongly,with increased investment in electricity generation and distribution to support the transition to net zero,and as the water industry steps up capital expenditure.Source:Glenigan.f=forecastChart 17:Value of Civil Engineering Main Contract Awards by MonthSource:Glenigan20212022202420232025JanAprJulAprOctJanAprJulOctJanAprJulOctJanAprJulOctJan million4,0003,5003,0002,5002,0001,5001,0005000Under 100m100m Construction Industry Forecast|UK and Republic of Ireland42State of the SectorWhile various major infrastructure projects are experiencing delays or cancellations,underlying civil engineering project-starts are expected to increase in 2025,building on a strong performance in 2024.Underlying civil engineering starts are expected to rise by 4%in 2025,this momentum is underpinned by increased government funding for smaller projects in the sector.Ongoing work on large projects such as HS2 and Hinkley Point have helped sustain overall sector activity and continue to support sector activity during the forecast period.The approval of the 10.2 billion Lower Thames Crossing will also provide a boost to sector activity with on-site work gathering momentum during the second half of the forecast period.Source:Glenigan.f=forecastChart 17:Value of Civil Engineering Main Contract Awards by MonthConstruction Industry Forecast|UK and Republic of Ireland43The Future of the SectorCivil engineering project starts are expected to grow steadily over the next three years,with utility-related work leading the way.The utilities sector is set to benefit from a rise in major project starts alongside broader strengthening in activity.The water industry,in particular,has secured a substantial increase in water charges to support a near doubling of investment programmes.Water companies are expected to invest an unprecedented 20 billion between April 2025 and March 2026the highest annual spend the sector has ever seen.This marks the start of a five-year,104 billion capital programme running from 2025 to 2030.The funding will support major upgrades,including new reservoirs,improved wastewater treatment,and targeted efforts to reduce pollution and improve river health across England and Wales.Energy investment is set to grow,with a focus on renewable energy and grid enhancements to support net zero goals,with the sector set to see significant funding focused on accelerating the transition to clean energy.The Government has announced an initial 300 million investment through Great British Energy to support the development of offshore wind supply chains,with the goal of mobilising billions more in private sector funding.This public investment is part of a broader package,as 43 billion in private investment has already been pledged for clean energy projects since July 2024.A sustained rise in infrastructure projects is expected over the next three years.The Budget increased near-term funding for smaller-scale schemes,with councils in England and Wales receiving 1.6 billion in central government support for road repairs and pothole filling in 2025/26,a near 50%increase on the previous year.The Spending Review has also set out a long-term investment framework for road and rail networks,which is expected to drive further growth in infrastructure starts in 2026 and 2027.Construction Industry Forecast|UK and Republic of Ireland44Construction Industry Forecast|UK and Republic of Ireland44CIS is the leading provider of business intelligence to the Northern Ireland and Republic of Ireland construction industry and was acquired by Glenigan in 2021.Republic of IrelandEconomic Context 45Executive Summary 47Housing 49Industrial 54Offices 57Retail 60Hospitality 62Education 65Health 68Civil and Utilities 71ROI ContentsIndicators20242025f2026fGDP growth(%,yoy)1.23.42.5Inflation(%,yoy)1.31.61.4Unemployment(%)4.34.34.4General government balance(%of GDP)4.30.70.1Gross public debt(%of GDP)40.938.638.2Current account balance(%of GDP)17.012.611.6Source:European CommissionSource:Monthly Unemployment Release,Department of Enterprise Trade and Employment 19 May 2025Construction Industry Forecast|UK and Republic of Ireland45Construction Industry Forecast|UK and Republic of Ireland45Economic ContextIn May 2025,the European Commission released their latest macroeconomic forecast for Ireland showing Ireland in a strong position,predicting moderate growth amid global economic uncertainty.In 2024 GDP rose by 1.2%driven by a rebound in exports.GDP growth is expected to accelerate in 2025 to 3.4%fuelled in the early part of the year by multinational exports ahead of potential tariffs.Modified domestic demand,which better reflects domestic economic activity in Ireland,grew by 2.7%in 2024.Exports rebounded strongly in 2024 and look to remain strong in 2025 although uncertainty exists around tariffs.Easing inflation and a strong labour market underpin strong private consumption although increased uncertainty will likely temper the rate of growth.The unemployment rate has remained low and there is continuing evidence of a strong Irish labour market with the latest results for Q1.Inflation remained low in early 2025 averaging out at 1.6%.The slight rise in rates is due to a slower decline in energy price rises and higher services inflation.However,lower prices for industrial goods and decreases in commodity prices are expected to mitigate these changes with an expected fall of inflation to 1.4%in 2026.“Todays results highlight the continued strength of the Irish labour market,with around 90,000 jobs added in the year to Q1 2025.On a seasonally adjusted basis,we now have over 2.8 million people employed in our country,while the unemployment rate stood at 4.0 per cent in the first quarter.”Construction Industry Forecast|UK and Republic of Ireland46These forecasts are built upon the analysis of Hubexos database of current and planned construction projects which have been examined alongside other market and economic variables.The key assumptions around which this forecast is based:A robust Irish economy with YoY growth for 2025 and 2026 Capital spending allocations focusing on the housing crisis and infrastructure deficit A 14 billion windfall tax Growth in domestic demand,steady inflation and employment20162015201720182019202020212022 2023 2024 2025f 2026f 2027fQ1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q38k7k6k5k4k3k2k1k0 millionForecastActualConstruction Industry Forecast|UK and Republic of Ireland47Executive SummaryDespite global economic and political uncertainty,Irelands construction market is expected to continue to grow in 2025.The well documented housing crisis in Ireland has meant that residential construction has dominated the sector.A huge upturn in housing starts in 2024 driven by the Governments development levy waiver has inevitably led to a dampening of new residential starts in 2025.The Government has targeted delivery of 50,000 homes per annum to 2040 and whilst we expect housing completions to rise this year,they are unlikely to meet that target.As Ireland seeks to address its infrastructure deficiencies which are impacting international competitiveness,Budget 2025 allocated a significant capital for infrastructure,boosted by a 14 billion windfall tax.The infrastructural deficiencies are impacting housing construction,and government curbs on electricity grid access are deterring Foreign Direct Investment.Return to office policies are driving demand for Grade A office space and we see activity returning to this sector as it settles to the new certainties of hybrid working.Strong consumer sentiment and favourable underlying economic conditions indicate growth in domestic demand should continue although subject to external global factors.CSO has reported a continuing downward trend in visitor numbers in the hospitality sector.However,this is disputed by the Irish Hotels Federation,which argues that on-the-ground data does not support the CSOs findings.In October 2024 the Irish Government allocated 11.8 billion to education in Budget 2025,the largest education budget in the history of the state.Capital expenditure priorities include expanding the capacity of early childcare provision with investment in new school facilities.In further education funds have been allocated to modernise Further Education and Training Campuses and expand Higher Education facilities including Technological Universities,Student Accommodation and research and innovation infrastructure.Irelands population is growing with a significant increase in the over 65s leading to increased demand for healthcare services.To that end,Budget 2025 has unveiled a record 25.8 billion allocation to the health sector.Executive Summary:Value of Underlying Project-StartsSource:CIS Insights.f=forecast.million20242025f2026f2027fHousing11,59514,39212,19816,514Industrial1,4791,3891,4521,487Offices140187190233Retail173176199209Hospitality390258268225Education282356425411Health385517396429Civil and Utilities1,4671,8582,2812,799Sport and Community390258268257TOTAL16,30119,39117,67722,565 million20242025f2026f2027fHousing89$%-155%Industrial15%-6%5%2%Offices-683%2#%Retail33%2%5%Hospitality62%-34%4%-16ucation-33&%-3%Health254%-23%8%Civil and Utilities-36#%Sport and Community62%-34%4%-4%TOTAL42%-9(%Source:CIS Insights.f=forecastSource:CIS Insights.f=forecastTable 1:Value of Underlying Project-Starts by SectorTable 2:Growth in the Value of Underlying Project-Starts by SectorConstruction Industry Forecast|UK and Republic of Ireland48 24 25-15 26 35 27Housing Starts20242025f2026f2027f million11,595m14,392m12,198m16,514mGrowth89$%-155%Construction Industry Forecast|UK and Republic of Ireland49Housing Huge surge in housing starts in 2024 due to government incentives 50,000 new homes needed each year to 2040 Social housing investment up 42%in 2024Source:CIS Insights.f=forecastState of the SectorThe Irish housing market continues to face significant challenges.Strong economic performance and a rising population have put pressure on housing supply with ever increasing demand not being met by current supply.This has inevitably led to rising house costs and challenges to affordability with the ensuing economic and social impacts in areas such as attracting new workers and homelessness.A sharp rise in commencements in 2024,arising from temporary waivers on water connections and levies paid to councils,should see a significant increase in the housing supply in 2025 and 2026,provided works are completed by the end of 2026.This large surge in commencements in 2024 has led to an inevitable slowdown in commencements this year to date.In Q1 2025 only 2,840 new homes started,in sharp contrast to the previous quarter of 14,379 homes,and indeed to Q1 2024 when work on 11,944 new homes got underway.20162015201720182019202020212022202320242025f 2026f 2027fQ1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q36k5k4k3k2k1k0 millionForecastActualConstruction Industry Forecast|UK and Republic of Ireland50According to Davy,by the end of last year,the Republic had 230,000 fewer homes than it needed.This shortage was spread around the State.Dublin and Munster needed 60,000 dwellings each.Leinster excluding Dublin was 70,000 down,while the shortage in Connacht was 24,000.Davy predicts housing supply figures of 42,000 and 50,000 for 2025 and 2026 respectively while the revised National Planning Framework sets housing targets at 50,000 per annum to 2040.Early indications in Q1 2025 have not shown the expected surge in housing completions,with only 5,292 homes delivered,down from 9,736 in the previous quarter and down from Q1 2024 when just over 6,000 homes were delivered.Housing InvestmentNevertheless,an increase in project starts is expected to lift unit starts this year.The first quarter saw 284 new housing projects start on site,comprising over 11,000 new homes to be delivered over the coming years.This represents a 20%increase from Q1 2024 when over 9,000 homes across 237 new housing projects got underway.In addition,two new student accommodation projects got underway in Galway and Limerick which will create 459 new student beds.While new investment surged in 2024 by 89%on the back of the development levy waivers,those levels are unsustainable from the existing pipeline.However,high demand should see new investment continue to rise at a more modest pace in 2025(24%),before levelling off in 2026.The upswing in new project starts in the quarter saw increased activity in the regions outside of Dublin,while Dublin itself saw a 9.2crease in the volume of units within the new projects started.Starting February,the largest new project to start was the 345m LRD in Montrose Dublin for Cairn Homes.The apartment development,approved after appeal,consists of 688 units.In Galway,the 140m Augustine Hill Development,a mixed-use urban regeneration project across 10 development blocks,got underway after appeal and consists of 376 apartment units.In Cork,BAM began construction on the Castlelake SHD in Carrigtwohill,a strategic housing development of 716 units.Chart 1:Value of Underlying Housing Project-StartsSource:CIS Insights.f=forecast.million3,5003,0002,5002,0001,5001,0005000Scheme HousingApartments2022Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1202220222022 2023 2023 2023 20232024 2024 2024 20252024010002000300040005000MidlandsBorderWestMid-WestSouth-EastSouth-WestMid-EastDublinQ1 2024Q1 2025Residental UnitsConstruction Industry Forecast|UK and Republic of Ireland51The Future of the Sector In Q1 2025,263 new housing developments were granted planning permission with a cumulative value of just under 2bn and comprising 8,200 new homes(3,600 apartments and 4,600 traditional housing units).In the same period 773 new student bedrooms are planned.Of the 4,600 scheme housing units,just over 1,200 are planned for Dublin while Meath and Louth account for 760 and 350 respectively.Two thirds of plans for new apartments are in Dublin.Chart 2:New Project Starts by Residential Units Q1 2025Chart 3:New Housing Planned Investment Figures Q1 2022 to Q1 2025 Source:CIS Insights.Source:CIS Insights.01600140012001000800600400200Mid-WestMidlandsSouth-EastBorderSouth-WestWestDublinMid-EastQ1 2024Q1 2025Residental Units02500200015001000500MidlandsWestMid-WestSouth-EastMid-EastBorderSouth-WestDublinQ1 2024Q1 2025Residental UnitsConstruction Industry Forecast|UK and Republic of Ireland52The largest development granted approval was the 80m Broomfield LRD in Malahide for Birhcwell Developments Ltd,comprising a mix of 297 housing and apartments.This development has now been appealed.Dublin City Council also gained approval for an 80m social housing development in Ballymun for 288 apartments.Outside of Dublin,an LRD development consisting a mix of 207 housing and apartments has been give the go ahead in Sligo for Novot Holdings Ltd.Chart 4:Planning Grants Traditional Housing Q1 2025Chart 5:Planning Grants Apartments Q1 2025Source:CIS Insights.Source:CIS Insights.Public Housing Starts20242025f2026f2027f million795m1,061m1,233m1,543mGrowth423%Construction Industry Forecast|UK and Republic of Ireland53Public HousingAn encouraging start to 2025 saw 50 new public sector housing schemes get underway,comprising 1,375 new houses and 377 apartment units.This represents a 143%increase in public sector housing starts from Q1 2024 and a 108%increase from the previous quarter.Over half of the new homes planned are in Dublin including a 274-unit development in Swords for Fingal County Council.The value of social housing starts rose by 42%in 2024 and,giving underlying need and government policy direction,we expect further significant investment in the coming years.Source:CIS Insights.f=forecastIndustrial Starts20242025f2026f2027f million1,479m1,389m1,452m1,487mGrowth15%-6%5%2%-6 25 5 26 2 27Construction Industry Forecast|UK and Republic of Ireland54 Exports to the US surge by 34%to 72 billion Challenges to operations costs with rising wages,energy and material costs Data centre developments restricted by grid infrastructureManufacturing plays a crucial role in the Irish economy employing over 220,000 with exports of manufactured goods reaching 214bn in 2024.Major exporting sectors include pharmaceuticals,medical devices and food.Exports to the US surged by 34%last year to 72.6bn while exports to the UK reached 22.5bn.Major challenges in this sector are those impacting operational costs-increasing wages,energy and raw material costs.Many companies are now looking to AI initiatives to boost efficiency and productivity.Despite the challenges,over 70%of firms surveyed in 2024 express positivity though there was less optimism in the food and drink sector.The potential impact of US tariffs this year has yet to be realised but they do pose a real threat to the sector with pharmaceutical and medical device manufacturers significant reliance on the US market.IndustrialSource:CIS Insights.f=forecast.20162015201720182019202020212022202320242025f 2026f 2027fQ1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3500450400350300250200150100500 millionForecastActualConstruction Industry Forecast|UK and Republic of Ireland55State of the SectorNew starts in the Industrial sector have remained relatively steady over recent years although 2024 figures showed a 15%increase in value over 2023 to reach 1.48bn.There has been a slow start to new investment in Q1 2025 but looking ahead we see that Q2 figures will bring the sector back in line with 2024 figures.Despite the challenges and the uncertainties of tariffs,the sector has proved resilient and although we expect a modest decline of 6%in investment this year,we see that figure rebounding in 2026 as economic turbulence from tariffs settles and measures to address the challenges come to fruition.Investment in manufacturing more than doubled in 2024 with new project starts reaching 719m.In Q1 2025,the volume of new projects started was up from the same period last year but the underlying value of those projects at 50m is down over 50%.Warehousing and logistics investment is characterised by a strong demand for modern facilities,rising rents and a shortage of available space for new investment.These challenging conditions have seen a decline in new investment from a high of 554m in 2021 to 325m and 333m in 2023 and 2024 respectively.The sector itself however is experiencing strong growth overall.Despite a slow start in Q1 2025,new starts in Q2 have already seen new investment figures for the year surpassing total investment in 2024.This is due in part to a 285m investment by IPUT management services for the creation of 12 logistic/warehouse buildings in Dublin.Works started in late April with delivery due in 2 years time.Irelands pharmaceutical industry is projected to grow to nearly 2.4bn in 2025 despite potential challenges arising from US tariffs.Ireland has established itself as a major drug manufacturer and with a tax friendly environment and strong R&D facilities the sector growth trajectory is likely to continue.New starts in pharma fell 75%last year to 90m from a high of 363m in 2023.This year to end of May investment figures are already down 11%on 2024.Data centres are an important component of the Irish economy,and this market is expected to grow in coming years.However,the market currently faces constraints due to grid infrastructure forcing potential investors elsewhere.Two new data centres got underway in 2024 in Kildare and Meath but to date this year there have been no new developments.Chart 6:Value of Underlying Industrial Project-StartsSource:CIS Insights.f=forecast.Chart 7010.80.60.40.2WestMidlandsBorderSouth-EastSouth-WestMid-WestMid-EastDublinApr 23 to Mar 24Apr 24-Mar 25 billionConstruction Industry Forecast|UK and Republic of Ireland56The Future of the SectorThere is a relatively strong pipeline in the Industrial sector although planned investment levels fell in 2024 by 19%from 2.27bn in 2023 to 1.85bn.In Q1 2025 planning grants across 108 new projects amounts to 550m,12%down on the same period last year.The largest project gaining approval,after appeal,was for the 143m development of two data halls in Fingal for Huntstown Power Company.Chart 7:Value of Underlying Project Approvals(April 2023 to March 2025)Source:CIS Insights.Office Starts20242025f2026f2027f million 140m 187m190m233mGrowth-683%2#% 33 25 2 26 23 27Construction Industry Forecast|UK and Republic of Ireland57Offices Dublin office market showing signs recovery Return to office policies driving demand for Grade A office space Weak pipeline indicates lag in new development to meet rising demandThe Irish office market continues to show signs of recovery,especially in Dublin where most of the office activity is centred.A changing market has seen a shift towards high spec premium office space in a bid to encourage people back to office working.Whilst hybrid working is likely to continue as a facet of working life in Ireland,more companies are enacting return-to-office policies.Office vacancy rates have been falling as a result and demand for limited Grade A office space is increasing leading to rent increases.There are signs of increased investment in new office developments although the construction pipeline is still historically low.These facts will put further pressure on rents as demand outstrips available supply.“Based on what we have seen in the first quarter the Dublin office market continues to show recovery signs.The stronger tone to take-up over the past few quarters was visible again in Q1 while data on availability,reserved space and space under construction all point to a market which is rebalancing for the better.”Ronan Corbett,Head of Offices at Cushman&WakefieldSource:CIS Insights.f=forecast.20162015201720182019202020212022202320242025f 2026f 2027fQ1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q36005004003002001000 millionForecastActualConstruction Industry Forecast|UK and Republic of Ireland58State of SectorNew office development has been in steady decline post pandemic as the sector realigns itself to new ways of working.New office starts in 2024 fell to a low of 140m,a 68ll from the previous year.However,new starts Q1 2025 at 70m are already well up on the same period last year and seem to indicate the market is recovering to meet rising demand.The largest project started in late January was a 10 storey,20,519 Sqm office development in Dublin 2 for Irish Life Assurance plc.Over 60%of new office development is in Dublin.Future of the SectorThe pipeline for new office developments has been in decline and has struggled to pass the 1bn mark in 2024 when plans were approved for 439k Sqm of office space a 14ll from 2023.Q1 2025 has not pointed to any great change with only 38 office development projects granted planning permission in the quarter with a combined value of just 22m.We expect the office market to continue an upward trend,but new office development is needed to meet rising demand as back to work trends continue.The time lag of development,evident from the planning pipeline,indicates that development will struggle to meet rising demand in the short term.Chart 8:Value of Underlying Project Starts by YearSource:CIS Insights.f=forecast.million1,4001,2001,0008006004002000202020212022202320242025 Q1Value of ApprovalsConstruction Industry Forecast|UK and Republic of Ireland59Chart 9:Value of Underlying Project Approvals to Q1 2025Source:CIS Insights.Retail Starts20242025f2026f2027f million173m176m199m209mGrowth33%2%5% 2 25 13 26 5 27Construction Industry Forecast|UK and Republic of Ireland60 Strong consumer sentiment and favourable underlying economic conditions Online spending continues to rise Strong demand for groceryThe Irish retail market is experiencing steady growth as consumer sentiment remains high and underlying economic factors such as low unemployment and increased earnings remain favourable.Grocery stores continue to be a major driver of growth with a continuing movement to local community shopping over multinational alternatives.In other areas of retail,online shopping is expected to continue to rise.State of the SectorIn 2024,the value of retail investment as measured by new project starts,rose by 33%from 2023.Although new investment figures for Q1 were disappointing at 34m,figures to mid-May have shown increased activity with the value of new project starts rising to 119m,trending across 81 projects,this represents a 95%increase on the same period last year.RetailSource:CIS Insights.f=forecast.20162015201720182019202020212022202320242025f 2026f 2027fQ1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3350300250200150100500 millionForecastActual010012014060804020WestSouth-WestMidlandsBorderMid-WestSouth-EastMid-EastDublinApr 23 to Mar 24Apr 24-Mar 25 millionConstruction Industry Forecast|UK and Republic of Ireland61Future of the SectorThe counterbalance between strong grocery retail growth and rising online transactions means that we can expect low level growth in this sector to continue although subject to external factors such as US tariffs,creating uncertainty in the market and threatening increased prices.Planned retail investment is strongest in Dublin and the Mid-East and investment is trending upwards in both locations.The pipeline of planning approvals has been trending around the 300m per annum since 2022.Figures for Q1 2025 are up 22%from 2024 indicating strong confidence in this sector and indications for a strong year ahead.Chart 10:Value of Underlying Retail Starts Chart 11:Value of Underlying Project Approvals(April 2023 to March 2025)Source:CIS Insights.f=forecast.Source:CIS Insights.Hospitality Starts20242025f2026f2027f million352m264m205m205mGrowth257%-25%-22%-25 25-22 26 10 27Construction Industry Forecast|UK and Republic of Ireland62 Declining visitor numbers and spend Global political and economic uncertainty Strong pipeline of new investmentLatest CSO figures for Q1 2025 report a continuing downward trend in visitor numbers evident from September 2024.Their results show that foreign visitors were down 23%compared to Q1 2024 and 7%from 2023.Visitors expenditure in Ireland for this period was 326m,representing a 22cline from Q1 2024.The Irish Hotels Federation has claimed that these figures do not correlate with industry data on the ground.According to IHF,tourism activity is holding up in 2025 and bookings are up 2%YoY.They have acknowledged that forward bookings are currently down 2%to August.Challenges in this sector arise from global political and economic uncertainty and Irelands high-cost base.HospitalitySource:CIS Insights.f=forecast.20162015201720182019202020212022202320242025f 2026f 2027fQ1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3300250200150100500 millionForecastActualConstruction Industry Forecast|UK and Republic of Ireland63State of the Sector2024 was a bumper year for investment in the hospitality sector.The number of projects getting underway rose by 36%to 203 with an accumulated value of 352m.When complete,these projects will add an additional 2,278 hotel beds to the sector.In Q1 2025,a further 883 hotel beds are planned from new developments getting underway,already a 64%increase 2024s record figures.820 of these beds will be in Dublin.These figures point to high levels of optimism in the sector although the additional capacity will take time to realise.As it stands,the sector is in a period of steady growth and with higher levels of investment in 2024 continuing,initially at a lower rate to 2026.Chart 12:Value of Underlying Hospitality Starts Source:CIS Insights.f=forecast.010012014016060804020BorderMid-EastSouth-EastDublinWestMid-WestSouth-WestMidlandsApr 23 to Mar 24Apr 24-Mar 25 millionHotel Beds8,0007,0006,0005,0004,0003,0002,0000202020212022202320242025 Q1Eastern&MidlandNorthern&WesternSouthernConstruction Industry Forecast|UK and Republic of Ireland64Future of SectorThe hospitality pipeline remains steady.In 2024,plans were granted for 246 projects valued at 507m with 2,558 new hotel beds planned.These figures represent a 9crease in the value of planned investment from 2023.Q1 2025 figures show a further decline from Q1 2024 figures at 129m but are on an upward trend from previous quarters in that year.There is a good regional spread of planned investment in Q1 2025.Chart 13:Value of Underlying Hospitality Planning Approvals Q1 2025Chart 14:Trends in Hotel Beds Granted Planning Approval Source:CIS Insights.Source:CIS Insights.Education Starts20242025f2026f2027f million 282m 356m425m411mGrowth-33&%-3% 26 25 19 26-3 27Construction Industry Forecast|UK and Republic of Ireland65Education Largest capital allocation in history for 2025 1.3 billion Expansion of childcare capacity Strong pipeline of new investmentIn October 2024 the Irish government allocated 11.8 billion to education in Budget 2025,the largest education budget in the history of the state.The capital budget increased to 1.3 billion in 2025 to support around 350 building projects that are currently at construction and over 200 other projects proceeding to construction during 2025 and early 2026.Capital expenditure priorities from the National Development Plan,revised in April 2025,include:Expanding capacity of early childcare provision with investment in new facilities Investment in new schools and refurbishment of existing schools and investment in special education infrastructure Modernisation of Further Education and Training Campuses Expansion of Higher Education facilities including Technological Universities,Student Accommodation and research and innovation infrastructureSource:CIS Insights.f=forecast.20162015201720182019202020212022202320242025f 2026f 2027fQ1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3180160140120100806040200 millionForecastActualConstruction Industry Forecast|UK and Republic of Ireland66State of the SectorCapital investment in education has faced challenges in recent years,with rising construction costs leading to the cancellation of tenders and contracts that had become financially unviable.A record budget allocation for 2025 and revised priorities promise a strong rise in expenditure in this sector across the board.Despite a challenging 2024,we see a significant increase in starts in 2025 and 2026.Last year 284 projects got underway in the Education sector with a combined value of 282m,delivering 679 new classrooms.This however represented a continuing downward trend in the value of new starts with values falling by 28%in 2023 and 15%in 2024.In Q1 2025,62 new projects got underway valued at 75m,a 104%increase from Q1 2024.This trend has continued into Q2 and at the end of May,the value of new starts had risen to 250m,a 200%rise from the same period in 2024.Schools and further education investment increased by 191%and 309%respectively while investment in early education infrastructure fell by 8%.Future of the SectorThe planning pipeline for education is strong.In 2024,275 new projects were granted planning approval valued at 874m,a 30%increase from 2023.Although Q1 figures have fallen from Q1 2024,we expect to see an upturn in planning activity in later quarters to reflect increased capital in budgets.Source:CIS Insights.f=forecast.Chart 15:Value of Underlying Project Starts(3 Qtr.moving average)020010015050South-WestBorderMidlandsMid-WestSouth-EastWestDublinMid-EastApr 23 to Mar 24Apr 24-Mar 25 millionConstruction Industry Forecast|UK and Republic of Ireland67Source:CIS Insights.Chart 16:Value of Underlying Project Approvals(April 2023 to March 2025)Health Starts20242025f2026f2027f million385m517m396m429mGrowth254%-23%8% 34 25-23 26 8 27Construction Industry Forecast|UK and Republic of Ireland68 Growing population with significant increase in over 65s Expansion of Primary Care Centres Focus on healthy communities and lifestyles with new policies Budget 2025 has unveiled a record 25.8 billion allocation to the health sector,marking a 2.94 billion increase compared to 2024.Capital expenditure rose from 1.51bn in 2024 to 1.83bn for 2025.Irelands population is growing and with a significant increase in the over 65s,leading to increased demand for healthcare services.The revised national development focusses on delivering a healthier population with:The promotion of active lifestyles with walkable,cycle friendly neighbourhoods and support for Healthy Ireland and the National Physical Activity Plan Expansion of Primary Care Centres(PCCs)Improvements in environmental health with cleaner air and water quality and green and blue infrastructure Enhance shared medical services with Northern IrelandHealthSource:CIS Insights.f=forecast.20162015201720182019202020212022202320242025f 2026f 2027fQ1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3350300250200150100500 millionForecastActualConstruction Industry Forecast|UK and Republic of Ireland69Major projects include:New Childrens Hospital at St.Jamess Campus Completed Paediatric Outpatient and Urgent Care Centres at CHI Connolly(Blanchardstown)and CHI Tallaght Elective Care Centres and Surgical Hubs to separate scheduled and unscheduled careState of the SectorNew investment in the health sector as measured by new developments,has remained relatively steady over recent years although there is evidence of increased activity in 2025 as a result of a healthy pipeline.In 2024 new starts increased to 385m,a 25%increase from 2023 resetting that years 25%drop from 2022.Figures to late May 2025 show a 93%increase in investment over the same period last year,adding an additional 210 hospital beds and 333 nursing home beds.In summary in Q1 2025:210 hospital beds will be created as part of fourteen new hospital projects which have a combined value of 78m,up 12%on Q1 2024.333 new nursing home beds will be created from 5 new projects costing 83m Investment in Primary Care Centres and other medical projects remained steady at 47mSource:CIS Insights.f=forecast.1 Excludes 2.4bn National Childrens Hospital started in April 2018Chart 17:Value of Underlying Project Starts1 0400200300100MidlandsSouth-WestBorderMid-EastWestSouth-EastMid-WestDublinApr 23 to Mar 24Apr 24-Mar 25 millionConstruction Industry Forecast|UK and Republic of Ireland70Future of the SectorIncreased budget allocations and current health policy has maintained a healthy pipeline of planned investment in the health sector.In 2024,203 projects received planning approval.This amounted to a 10.3%rise in value to 806m from 2023.Q1 2025 has seen planned investment rise by 60%to 347m from Q1 2024.Seven new hospital projects and five new nursing home projects received planning approval in the quarter valued at 132m and 77m respectively.However,most of the planned investment at 138m came from other medical facilities especially primary care centres.Source:CIS Insights.Chart 18:Value of Underlying Project Approvals(April 2023 to March 2025)Civil and Utility Starts20242025f2026f2027f million 1,467m 1,858m2,281m2,799mGrowth-36#% 27 25 23 26 23 27Construction Industry Forecast|UK and Republic of Ireland71Civil and Utilities Infrastructure deficiencies impacting Irelands competitiveness Large budget allocation for water and transport projects 14 billion windfall tax receipts-creation of infrastructure fundsIrelands Budget 2025 programme allocates nearly 15 billion to capital expenditure in 2025,representing Irelands highest ever allocation to capital spend.As Ireland seeks to address its infrastructure deficiencies which are impacting international competitiveness,budget 2025 allocates a significant capital allocation for infrastructure.The increased allocation arises from a significant tax windfall of around 14 billion(primarily from back taxes owed by Apple,as a result of EU rulings regarding illegal tax deals).The major infrastructure allocations are:A new Infrastructure,Climate and Nature Fund to support infrastructure projects 750m for energy and offshore infrastructure Uisce Eireann allocated 1 billion for capital investment in water infrastructure 2.9 billion allocated to transportSource:CIS Insights.f=forecast.20162015201720182019202020212022202320242025f 2026f 2027fQ1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q38007006005004003002001000 millionForecastActualConstruction Industry Forecast|UK and Republic of Ireland72State of the SectorNew project starts fell by 36%in the Civil sector in 2024 to 1.57bn from a five year high of 2.46bn in 2023.2024 was a challenging year with construction cost inflation,supply chain issues,planning and regulatory hurdles and labour shortages in key areas.Increased capital allocations and a strong pipeline of shovel ready projects should see a more buoyant 2025 and 2026.In Q1 2025,40 new projects started costing 634m,a 37%increase from Q1 2024.The transport sector accounted for 526m of this figure.Future of the SectorGiven the record allocations to capital expenditure,we expect on-the-ground activity to increase over 2025 and 2026 although Ireland has had major difficulties delivering large infrastructure projects quickly.2023 and 2024 saw significant increases in the value of construction tenders rising to 8.1bn and 8.9bn respectively.In Q1 2025 planning grants were issued to 51 projects costing 885m.From 2023 to the end of Q1 2025 projects valued at 8.4 billion have been granted planning approval.Just under 50%of the planned investment is for Dublin although 3.5bn of this was for two DART projects.Source:CIS Insights.f=forecast.Chart 19:Value of Underlying Project Starts(3 Qtr.moving average)02 bn3 bn1 bn4 bnBorderMidlandsMid-WestSouth-EastWestSouth-WestMid-EastDublinConstruction Industry Forecast|UK and Republic of Ireland73Source:CIS Insights.Chart 20:Regional Allocation of Planned Investment 2023 to Q1 2025.Key Recommendationsfor the construction industry over the next three yearsConstruction faces a progressive improvement in market conditions over the next three years.The brightening economic outlook will generate private sector opportunities.In addition,the Governments Spending Review promises to unlock increased investment in education,health and social housing from next year.Civil engineering is set to benefit from increased government investment in transport infrastructure,as well as rising investment by water companies and in energy infrastructure.Targeting new growth areas A strengthening economy and changing government policy will drive a shift in construction activity across sectors and regions.Structural changes are also creating new opportunities in warehousing&logistics,office refurbishment and fit out,and the repurposing of redundant commercial premises.Planning reforms promise to improve the supply of development land for residential development.As these reforms feed through,they should support a progressive strengthening in both private and social housing developments over the next three years.The review of government capital programmes post-election has disrupted the progress of existing projects and dampened activity in publicly funded sectors,disrupting many firms planned workflow.While several delayed projects are now going ahead,firms will need to remain alert to new opportunities that can help fill any gaps in their work programmes.Regionally,construction markets in the northern half of England are set to outperform London and southern England over the forecast period.This reflects a shift in government funding and policy as the new administration looks to direct funding towards economically weaker regions.Firms will need to target these new and shifting opportunities,ensuring that they have the ability and resources to increase their exposure to growing markets and locations.Factor-in supply side constraintsOverall material availability and inflation has stabilised,although prices are still high and the cost of some products is still volatile.Contractors and sub-contractors should remain alert to possible supply interruptions,especially from overseas sources.In particular,the current US instigated disruption to global trade may affect the availability and cost of overseas sourced products and those incorporating imported components.Skills shortages and labour costs are expected to grow alongside the strengthening in starts.Contractors and sub-contractors should factor-in the impact on their costs and development schedule when bidding for work.Mitigate riskOver the last two years supply-side constraints have disrupted project schedules and extended construction times,with implications for workload,turnover and cashflow.The typical time taken for a project to secure detailed planning consent or to progress from approval to work starting on site is over 40%longer than in 2019.Planned construction programmes on some projects are being further disrupted by regulatory supervision of projects as the Building Safety Act comes into force.Construction Industry Forecast|UK and Republic of Ireland74The extended pre-construction lead times potentially increases uncertainty around the initiation of planned projects with implications for contractors and sub-contractors workload.To mitigate these effects,contractors might consider an increased portfolio of targeted opportunities to offset the risk of pre-construction delays to individual projects.Given the rise in insolvencies,firms could reduce risk by diversifying their client base and ensuring a wider pipeline to protect against financial or contractual challenges with any single client.Similarly,supply chains should be evaluated to avoid over-reliance on a limited number of suppliers.On-site efficiency and collaborative workingWhile supply disruptions are expected to ease,skilled labour shortages will likely remain a significant challenge.The sectors workforce has been reduced due to lower access to EU labour,post-pandemic shifts to other industries,and early retirements.Although the recent slowdown in activity may have provided short-term relief,firms should plan for skilled labour shortages that could drive up costs and delay project delivery.The Building Safety Act is also changing how projects are managed,particularly high-rise and high-risk residential structures.The Act mandates a more detailed pre-construction design and planning process,increasing the cost and risk of changes made during construction.This shift presents an opportunity to leverage offsite manufacturing and prefabricated systems,reducing on-site labour demand
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H O N G K O N G C I R C U L A R B U I L T E N V I R O N M E N TG U I D E B O O KHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKCopyright Notices All rights reserved.Companies or organisations may use any part of the Guide they find appropriate for the purpose of training of a non-profit-making nature.No reproduction or reprint of the contents is allowed for commercial applications without prior written authorisation from the Hong Kong Green Building Council Limited(“HKGBC”),the Construction Industry Council(“CIC”)and the Business Environment Council Limited(“BEC”).DisclaimerThe information provided in the Hong Kong Circular Built Environment Guidebook(“this Guidebook”)including but not limited to all text,graphics,drawings,diagrams,photographs and compilation of data or other materials,is only reflective of the situation as at the time stated or prepared,and is for general reference and indicative purposes only.Hong Kong Green Building Council Limited(“HKGBC”),Construction Industry Council(“CIC”)and Business Environment Council Limited(“BEC”)make no guarantee,representation or warranty as to the truthfulness,timeliness,accuracy or completeness of this Guidebook or of the information and the data gleaned from other sources in the preparation of,and as set out in,this Guidebook.References to and of sources do not constitute an endorsement or recommendation by HKGBC,CIC and BEC of the third parties or their products/services(if any).Whilst reasonable effort has been made to ensure the accuracy of this Guidebook,this Guidebook is provided“as is”and“as available”.No confidential information is disclosed in the Guidebook.HKGBC,CIC and BEC accept no responsibility for any errors(negligent or otherwise)in this Guidebook.Furthermore,HKGBC,CIC and BEC will not accept and shall not be responsible for any liability whatsoever(whether in tort,contract or otherwise)for any loss or damage that may be caused to any person howsoever arising from the use of and/or reliance on this Guidebook.To the fullest extent permitted by law,HKGBC,CIC and BEC expressly exclude any warranty or representation of any kind,either express or implied.Moreover,any cost and predicted performance mentioned in this Guidebook are intended for guidance and reference only and in no way constitute advice or an offer.These cost information and estimations are based on a simplified and idealised version of a building and circumstances that do not and cannot fully represent all of the intricacies of the building in operation.The actual performance may be influenced by factors such as but not limited to weather,construction and fit-out,performance of plant and facilities,operation and maintenance,etc.Prior to carrying out minor works and environmental improvement of the building,the landlords,tenants and occupants should consult an Authorised Person under the Buildings Ordinance,Cap.123 on the choices of green features to be adopted and on relevant statutory requirements.The links to external websites listed in this Guidebook are provided purely for convenient reference.Their inclusion here does not constitute an endorsement or an approval by HKGBC,CIC and BEC of any of the products,services,or opinions of the organisations or individuals concerned.HKGBC,CIC and BEC bear no responsibility for the accuracy or the content of external sites or for those of the subsequent links,and do not accept any responsibilities for any loss and/or damage whatsoever arising from any cause whatsoever in connection with these websites to the extent permitted by law.Users are responsible for making their own assessments of all information contained in or in connection with these sites and are advised to verify such information by making reference to its original publication and obtain independent advice before acting on it.To the maximum extent permitted by the applicable law,HKGBC,CIC and BEC shall not be liable in tort,contract,or otherwise for any losses,damages,demands,claims,judgments,actions,costs,legal fees,expenses,fines or penalties whatsoever(including,without limitation,any special,indirect,direct,punitive,incidental or consequential losses,loss of business,loss of data or loss of profit),which may arise in relation to this Guidebook and the contents therein.This clause applies irrespective of whether or not HKGBC,CIC and BEC were advised of or should have been aware of the possibility of such losses to you.All intellectual property(including but not limited to any copyright,trademarks,service marks,logos,trade names,corporate names,Internet domain names,patents,designs,database rights,rights in designs,topography,know-how,trade secrets or any similar right or proprietary right,whether registered or not,and all applications or rights to apply for the same(where such applications can be made),whether presently existing or created in the future,anywhere in the world,and all benefits,privileges,or rights to sue,recover damages and obtain relief for any past,current or future infringement,misappropriation or violation of any of the foregoing rights)and the rights in this Guidebook(“Intellectual Property”)belong to HKGBC,CIC and BEC,unless otherwise stated.You have no right to use any of HKGBC,CIC and BECs Intellectual Property.You may not copy,distribute,modify,transmit,publish or use this Guidebook in any manner for public or commercial purposes without prior written permission from HKGBC,CIC and BEC.The terms of this Disclaimer may be amended by HKGBC,CIC and BEC from time to time in their sole and absolute discretion without any notice or liability to you.The latest version of the Disclaimer shall be published on the HKGBC,CIC and BEC websites.If you continue to use this Guidebook after an amended version of the Disclaimer has been published,you agree to be bound by such amendments to the Disclaimer.It is your responsibility to regularly check to see if there are any amendments to the Disclaimer.If there is any inconsistency or ambiguity between the English version and the Chinese version of the Disclaimer,the English version shall prevail.HONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKAbout UsHong Kong Green Building CouncilThe Hong Kong Green Building Council(HKGBC)is a non-profit,member-led organisation established in 2009 and has become a public body under the Prevention of Bribery Ordinance since 2016.The HKGBC strives to promote the standard and development of sustainable buildings in Hong Kong.The HKGBC also aims to raise green building awareness by engaging the government,the industry and the public,and to develop practical solutions for Hong Kongs unique,subtropical built environment of high-rise,high density urban area,leading Hong Kong to achieve carbon neutrality by 2050 and to become a worlds exemplar of green building development.Our passion for a sustainable built environment is the motivating force to achieve our goals.The wide experience and deep insight of our members and experts is the underlying foundation for real results.Construction Industry CouncilThe Construction Industry Council(CIC)was formed in 2007 under the Construction Industry Council Ordinance(Cap.587).The CIC consists of a chairman and 24 members representing various sectors of the industry including employers,professionals,academics,contractors,workers,independent persons and Government officials.The main functions of the CIC are to forge consensus on long-term strategic issues,convey the industrys needs and aspirations to the Government,provide professional training and registration services,and serve as a communication channel between the Government and the construction industry.Business Environment CouncilBusiness Environment Council Limited(BEC)is an independent,non-profit membership organisation,established by the business sector in Hong Kong.Since its establishment in 1992,BEC has been at the forefront of promoting environmental excellence by advocating the uptake of clean technologies and practices which reduce waste,conserve resources,prevent pollution and improve corporate environmental and social responsibility.BEC offers sustainable solutions and professional services covering advisory,research,assessment,training and award programmes for government,business and the community,thus enabling environmental protection and contributing to the transition to a net-zero economy.HONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKContents Foreword .ii 0.Background .1 1.Principles of a Circular Economy .3 2.Building and Construction Materials .6 3.Design and Retrofit .10 4.Regenerate Nature .13 5.Levers for Change .16 6.Case Studies of Hong Kong Circular Practice .19Glossary .41Bibliography .43Acknowledgements .44iHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKFOREWORDForewordfrom HKGBC ChairmanOn behalf of the Hong Kong Green Building Council(HKGBC),we take great pleasure in presenting the Hong Kong Circular Built Environment Guidebook,a resource designed to advance the adoption of circular economy solutions within the building industry.The HKGBC is dedicated to advancing green and sustainable building practices through active engagement with the government,industry stakeholders,and the public.We strive to raise awareness and develop practical,locally adapted solutions for the built environment.Our efforts are geared towards supporting Hong Kongs goal of achieving carbon neutrality before 2050 and positioning the city as a global model of green building development.The transition to circular economy is widely recognised as a vital strategy for striving to attain long term sustainability.Aligned with the World Green Building Councils Circular Built Environment Playbook,the HKGBC,in collaboration with the Business Environment Council(BEC)and the Construction Industry Council(CIC),is actively exploring the feasibility of implementing circular economy principles and practices tailored to Hong Kongs unique context.The growing volume of construction and demolition wasteconstituting a significant share of the citys overall solid wastecontinues to strain Hong Kongs waste management systems.It is imperative for the building industry to critically reassess existing practices and adopt sustainable alternatives.By integrating circular economy concepts into building process,stakeholders can optimise resource use and substantially reduce waste generation.To this end,the Guidebook presents a comprehensive overview of circular economy strategies across four key pillars:Building and Construction Materials,Design and Retrofit,Regenerate Nature,and Levers for Change.Supported by a diverse collection of local case studies,it serves as a practical and insightful resource for professionals seeking to integrate circular practices into their work.We extend our sincere gratitude to the Material Circularity Task Force,its dedicated working group,and all case study contributors for their valuable input in shaping this publication.It is our hope that the Guidebook will inspire stakeholders across the building industry to embrace circularity and help forge a more sustainable,resilient city for future generations.Dr CHEUNG Tin-cheung,SBSChairmanHong Kong Green Building CounciliiHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKFOREWORDForewordfrom CIC ChairmanAs Chairman of the Construction Industry Council(CIC),I am honoured to present the Hong Kong Circular Built Environment Guidebook.This Guidebook,developed in collaboration with the Hong Kong Green Building Council and the Business Environment Council,represents a significant milestone in advancing sustainability and circularity in Hong Kongs construction industry.Hong Kong has long been a beacon of innovation and progress.Still,the urgent challenges of climate change,resource scarcity,and waste management compel us to rethink how we design,build,and operate within the built environment.The construction sector generates about 28%of Hong Kongs total solid waste received at landfills.Transitioning to circular practices,such as material reuse,recycling,and design for disassembly,is crucial to reduce reliance on landfills and lower carbon emissions.This Guidebook aligns with global frameworks like the World Green Building Councils Circular Built Environment Playbook but is specifically tailored to address the unique challenges and opportunities here in Hong Kong.It moves beyond theory to offer practical,actionable strategies and share the local innovative practices that we can all adopt.The CIC is proud to be already embedding these principles through our own initiatives,such as the CIC Smart Waste Management Tool that streamlines construction waste management,and the CIC Green Product Certification,which promotes sustainable material selection.By adopting the principles outlined in this Guidebook,stakeholders can reduce waste generation,extend the life cycle of materials,and contribute to Hong Kongs 2050 carbon neutrality goal.This transition presents not only an environmental imperative but also an opportunity to drive innovation,strengthen industry competitiveness,and unlock long-term economic value,which can create benefits that transcend environmental impact to the social and economic aspects.I encourage all industry practitioners,policymakers,and stakeholders to explore this Guidebook and join us in transforming Hong Kongs built environment into a global model of sustainability and circularity.Ir Prof.Thomas HO On-singChairmanConstruction Industry CounciliiiHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKFOREWORDForewordfrom BEC CEOAs Hong Kong advances toward its 2050 vision of carbon neutrality,the built environment has become a crucial frontier.In a city defined by high-density vertical development,the way we design,construct,operate,and decommission buildings has far-reaching environmental consequences.Globally,buildings and infrastructure now account for nearly half of all extracted raw materials,driving climate change,biodiversity loss,and other adverse environmental impact.What begins as intensive resource extraction and usage could end as massive waste generation,and Hong Kong is facing an enormous challenge at the tail end.In 2023,the city produced an average of 45,560 tonnes of construction waste every day.Of this,65%went to public fill facilities,10%to landfills,and only 25%was directly reused.For too long,reclamation and disposal have dominated construction waste management,an approach no longer sustainable as land tightens and the pressure to decarbonise grows.This means we must view every building not as an endpoint but as part of a continuous cycle of material utilisation.Through smarter design,responsible sourcing,and creative reuse,we can conserve resources,reduce waste,and unlock new business opportunities that benefit both our economy and our environment.This Guidebook,produced jointly by Business Environment Council(“BEC”),Hong Kong Green Building Council(“HKGBC”),and Construction Industry Council(“CIC”),is designed to illustrate,support,and inspire that transformation.It builds on the World Green Building Councils Circular Built Environment Playbook and tailors global principles to our local context.With twenty local case studies spanning building materials,design and retrofit,nature regeneration,and systemic levers for change,this Guidebook showcases the innovation of Hong Kong businesses and offers practical examples that others can learn from and build upon.As a membership organisation galvanising business actions towards environmental excellence and net zero in Hong Kong,BEC is committed to advancing this transformation in close partnership with the industry to embed circularity in Hong Kongs built environment.Mr Simon NG Ka-wing Chief Executive OfficerBusiness Environment Counciliv0.BACKGROUNDHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK0.Background0.1 World Green Building Council Circularity AcceleratorThe World Green Building Council(“WorldGBC”)announced the release of the Circular Built Environment Playbook in May 2023.The publication aims to raise awareness and promote the adoption of circular economy solutions by providing guidance to stakeholders throughout the built environment value chain,enabling them to make sustainable and circular decisions.Through this initiative,the global network of the WorldGBC is actively working towards its goals of resource efficiency and circularity,striving to create a built environment that supports the regeneration of resources and natural systems,while also delivering socio-economic benefits through a circular economy.In line with the Circular Built Environment Playbook framework,this Guidebook specifically focuses on Hong Kong,empowering local building industry practitioners and stakeholders to actively participate in the circular built environment.By extending the contexts to Hong Kong,this Guidebook provides valuable insights and practical strategies for implementing circular practices within the region.From Linear City to Circular Hub:Hong Kongs NecessaryTransition10.BACKGROUNDHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK0.2 Why a Circular Economy?Our economic model is primarily rooted in a linear take-make-waste system,which operates by extracting finite resources,producing goods,and discarding waste without considering long-term sustainability.This linear approach accelerates the depletion of finite resources and generates overwhelming waste,which collectively exacerbates the triple planetary crisis:climate change,biodiversity loss,and pollution.In just five years(2016-2021),humanity consumed 582 billion tonnes of materials,nearly matching the 740 billion tonnes used throughout the entire 20th century1.Recent estimates reveal that humanity is now consuming natural resources at a rate 1.7 times faster than the Earth can regenerate2.This highlights the alarming depletion of resources driven by the unsustainable pace of resource extraction.Specifically,nearly 50%of all raw materials taken from the Earth are used to create buildings and infrastructure3.The linear economy also contributes to rising waste generation.According to the Global Waste Management Outlook 2024,municipal solid waste(“MSW”)is expected to rise from 2.1 billion tonnes in 2023 to 3.8 billion tonnes by 20504.Meanwhile,approximately 37%of the disposed waste was sent to landfills,while 31%was subjected to open dumping5.Apart from MSW,construction and demolition waste accounts for around one-third of the solid waste generated in the world,with most of it being dumped in landfills6.Landfill and open dumping contribute significantly to greenhouse gas emissions,primarily through the release of methane,which exacerbates global temperature rise.Additionally,they lead to severe environmental consequences,including water and soil pollution from leakage,air pollution caused by odorous emissions,and land-use changes that destroy habitats,harm biodiversity,and negatively impact the health of nearby organisms.To tackle these challenges and support sustainable development,the concept of the circular economy,which is recognised as a solution to facilitate better resource utilisation and waste reduction,was introduced.In addition to addressing the environmental issues,transitioning to a circular economy can also reduce dependence on raw materials,create more jobs,and lower costs.Despite widespread promotion and discussion of the circular economy approach,the global economys reliance on recycled materials has declined,dropping from 9.1%in 2018 to just 6.9%in 2025,a 31crease over seven years7.This alarming trend highlights the urgent need to take decisive action to mitigate the planetary crisis and ensure a sustainable future.0.3 Why a Circular Economy in Hong Kong?Hong Kong remains predominantly a linear city,with limited progress in transitioning to the circular economy8.Key aspects of the circular economy,such as eco-design,repair,reuse,refurbishment,and remanufacturing,are not well understood by the public and remain uncommon practices in Hong Kong.This lack of circular practices exacerbates the citys waste management challenges,which have become a critical issue owing to high waste generation,low recycling rates,and heavy reliance on landfills.According to data released by the Environmental Protection Department in 2023,the total quantity of municipal solid waste(“MSW”)disposed of in landfills has decreased for two consecutive years,falling to 3.97 million tonnes.The average daily disposal quantity in 2023 was 10,884 tonnes,representing a 2.2%reduction compared to the 11,128 tonnes recorded in 20229.The per capita MSW disposal rate per day also declined by 4.7%,dropping from 1.51 kilograms in 2022 to 1.44 kilograms in 202310.However,these figures remain high compared to other cities such as Seoul(0.99 kilograms11)and Taipei(1.09 kilogram12).In addition,the daily amount of construction and demolition(“C&D”)waste disposed of in landfills increased slightly,rising from 4,128 tonnes in 2022 to 4,428 tonnes in 2023.Heavy reliance on landfills has made them a major source of methane emissions,accounting for 8.5%of Hong Kongs total greenhouse gas emissions13.Additionally,landfills pose significant risks of pollution from leakage and consume valuable land resources,further exacerbating the strain on the citys already limited space.Accelerating the transition to the circular economy is essential for Hong Kong to achieve its 2050 carbon neutrality goal,as outlined in its climate action plan.This shift is critical to reducing negative environmental impacts,increasing local material circulation to reduce reliance on imports,and boosting the recycling industry.Given Hong Kongs densely built environment and high levels of construction activity,adopting circular principles in the built environment is particularly vital to addressing the citys challenges and advancing sustainability.1 https:/reports.circularity-gap.world/cgr-global-2024-37b5f198/CGR Global 2024 - Report.pdf2 https:/www.footprintnetwork.org/2024/07/21/earth_overshoot_day_2024/3 https:/ https:/wedocs.unep.org/bitstream/handle/20.500.11822/44939/global_waste_management_outlook_2024.pdf?sequence=35 https:/datatopics.worldbank.org/what-a-waste/trends_in_solid_waste_management.html6 https:/ https:/global.circularity-gap.world/8 https:/bec.org.hk/sites/default/files/publications/BEC_Circularity_Assessment_Report_final.pdf9 https:/www.wastereduction.gov.hk/sites/default/files/resources_centre/waste_statistics/msw2023_eng.pdf10 https:/www.legco.gov.hk/yr2024/english/panels/ea/papers/eafseh20240527cb1-1664-1-e.pdf11 https:/www.seoulsolution.kr/en/content/statistic-seoul12 https:/www-ws.gov.taipei/Download.ashx?u=LzAwMS9VcGxvYWQvMzYzL3JlbGZpbGUvMTg2NTIvODQxMzk2Ny82ZDNiZWQzYi04NWYxLTRiMDI-tYTZhZ C0zMmQ1NWE3NzRjZWMucGRm&n=MTEy55Kw5L+d5bGA57Wx6KiI5bm05aCxLnBkZg=&icon=.pdf13 https:/cnsd.gov.hk/wp-content/uploads/2025/04/Data-Tables_2023_AR5_Sector-r2_clean.pdf21.PRINCIPLES OF A CIRCULAR ECONOMYHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK1.Principles of a Circular Economy1.1 What is a Circular Economy?In contrast to linear economic models that dispose of resources after their initial functional use,a circular economy aims to optimise resource utilisation and minimise waste throughout the entire life cycle.In the built environment,this approach involves the following stages:Manufacturing Stage:Emphasise the use of local,alternative,and reused materials,particularly those obtained from existing buildings or assets through deconstruction.Prioritise the use of renewable energy sources and adopt efficient practices for natural resource usage,such as water.Design Stage:Prioritise energy efficiency and incorporate passive design strategies.Promote the generation and utilisation of renewable energy,implement water harvesting techniques,and encourage the regeneration of nature.Give preference to locally sourced,reused,or alternative materials.Design buildings for ease of maintenance,disassembly,and deconstruction,and choose non-toxic materials to facilitate future reuse and circulation.Construction Phase:Utilise low embodied carbon construction processes,such as modular construction.Implement higher performance standards for construction waste management.Prioritise the use of sustainable materials and products throughout the decision-making processes.Operational Phase:Maintain buildings effectively to extend the lifespan of assets and their components.Minimise waste generation and restore and protect natural capital on-site.Retrofit Stage:Retrofit all assets according to higher sustainability performance standards.Prioritise reuse over demolition,and prefer alternative,renewable,reused,or recycled materials for asset renovations.End-of-Life Stage:Prioritise full disassembly and deconstruction to enable the reuse of all building materials,products,and components.Avoid demolition and landfilling of building components.Rethinking Everything:TheFoundationof a CircularBuilt Environment31.PRINCIPLES OF A CIRCULAR ECONOMYHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK1.2 A Circular Economy for the Built EnvironmentWhile the concept of circularity has gained popularity in recent years,the truth is that buildings have inherently embodied circular principles for centuries.Ideas like urban mining,buildings serving as material banks,and design for disassembly may seem like novel concepts,but in reality,people have been reusing and repurposing building materials throughout history.Unfortunately,in our relatively recent past,we have overlooked these sustainable building practices and have instead caused significant environmental harm.Currently,the circular use of materials and products is not progressing in the right direction.Estimates from 2023 indicate that the world is only 7.2%circular,which is a decrease from 8.6%in 2020 and 9.1%in 2018.This downward trend highlights the need for urgent action to reverse the environmental damage caused by our neglect of circular principles.By embracing and implementing circular practices,we can restore the balance and sustainability that buildings have inherently possessed for millennia.1.3 A Definition for a Circular BuildingA circular building is designed to optimise resource utilisation and minimise waste throughout its entire life cycle.This is achieved through various strategies,including:Utilising durable products and services made from secondary,non-toxic,sustainably sourced,renewable,reusable,or recyclable materials.Promoting space efficiency over time by incorporating shared occupancy,flexibility,and adaptability into the building design.Prioritising longevity,resilience,durability,easy maintenance,and reparability of building components and systems.Facilitating the disassembly,reuse,or recycling of embedded materials,components,and systems when the building reaches the end of its life.Conducting life cycle assessments(LCA)and life cycle costing(LCC)to evaluate the environmental impact and cost-effectiveness of the building throughout its lifespan.Ensuring readily available digital information,such as building material passports,to enable efficient tracking and management of building materials and their environmental characteristics.1.4 A Circular Value Chain in the Built EnvironmentEnabling circular solutions at scale in the built environment requires the active involvement of all stakeholders along the value chain.It is essential for every actor to embrace the necessary actions and become“circular-ready,”as this sets the stage for creating a thriving regenerative economy that operates within the limits of our planet.By collectively adopting circular practices and working towards sustainable market conditions,stakeholders can drive the transition towards a more sustainable and circular built environment,benefiting both the economy and the environment.1.5 Assessment Frameworks for Circularity in the Built EnvironmentMultiple frameworks and tools have been developed globally to assess and promote circularity in the built environment.These methodologies enable stakeholders to evaluate material flows,resource efficiency,and life cycle impacts while supporting the transition from linear to circular practices.After reviewing various assessment approaches(summarised in the table below),this Hong Kong Circular Built Environment Guidebook adopts the WorldGBCs Circular Built Environment Playbook as its foundational framework.The Playbooks comprehensive strategies emphasise material efficiency,design for disassembly and regenerative solutions,and provide actionable guidance for policymakers,designers,and industry practitioners.The Circular Built Environment PlaybookAuthor/Publisher:World Green Building Council The Playbook outlines strategies to transition from linear to circular practices in buildings and cities,emphasising material efficiency,design for disassembly/reuse,and nature regeneration,supported by global case studies and calls to action for policymakers,businesses,and designers to scale sustainable solutions.Link:https:/worldgbc.org/article/circular-built-environment-playbook/A Framework for Circular Buildings:indicators for possible inclusion in BREEAMAuthor/Publisher:Dutch Green Building Society (DGBC),Metabolic,SGS Search and Circle Economy A framework outlines a strategic approach to designing and constructing sustainable buildings by integrating circular economy principles,which identifies key impact areas of materials,energy,water,biodiversity,health,and social value and proposes practical strategies(Reduce,Synergise,Supply,Manage)with measurable indicators for inclusion in BREEAM standards to enhance resource efficiency and long-term building performance.Link:https:/www.circle- Building Assessment Prototype(CBA)Author/Publisher:Buildings as Material Banks(BAMB)A methodology and digital tool under development assesses circularity in buildings,comparing material flows,reuse potential,and environmental impacts by integrating BIM data,automated quantity extraction,and predefined material attributes to evaluate design scenarios against conventional construction practices.Link:https:/www.bamb2020.eu/post/cba-prototype/41.PRINCIPLES OF A CIRCULAR ECONOMYHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKCircularity CalculatorAuthor/Publisher:IDEAL&CO Explore(endorsed by Ellen MacArthur Foundation)A digital tool evaluates circularity in product design,enabling users to analyse material flows,reuse potential,and cost impacts through adjustable scenarios,with functionality for importing Bill of Materials data and comparing strategies to optimise recycling,remanufacturing,and value retention.Link:https:/circularitycalculator.nl/Cradle to Cradle(C2C)CertifiedAuthor/Publisher:Cradle to Cradle Products Innovation Institute A globally recognised,multi-attribute certification standard evaluates products across five sustainability categories,including material health,circularity,clean air&climate,water&soil stewardship,and social fairness,ensuring safe,circular,and responsibly designed solutions aligned with ISO 14024 for environmental labelling.Link:https:/c2ccertified.org/Denmark Circularity Indicator FrameworkAuthor/Publisher:Denmark Circularity Foundation A framework measures the nations transition to a circular economy,quantifying material flows,resource efficiency,and CO impacts across key sectors like construction,manufacturing,and food systems,while identifying gaps and opportunities to improve on Denmarks 4%circularity rate and align with global sustainability targets.Link:https:/www.circularity-gap.world/denmarkDGNB Toolbox“Circular Building”Author/Publisher:Deutsche Gesellschaft fr Nachhaltiges Bauen(DGNB)German Sustainable Building Council Practical resources include checklists,case studies,and certification criteria,implementing circular economy principles in construction,and emphasising resource efficiency,deconstruction planning,and material reuse to enhance sustainability performance within the DGNB certification framework.Link:https:/www.dgnb.de/en/sustainable-building/circular-buildingISO 59020Author/Publisher:International Organization for Standardization An international standard provides requirements and guidance for measuring and assessing circular economy performance across economic systems,enabling organisations to evaluate resource efficiency,circular flows,and sustainability impacts through consistent indicators and methodologies.Link:https:/www.iso.org/standard/80650.htmlMadaster Circularity IndexAuthor/Publisher:Madaster Foundation An indicator quantifies a buildings circularity(0-100%)by assessing material flows during construction and end-of-life phases,incorporating correction factors for data completeness and detachability,while identifying unknown elements to improve accuracy in measuring reuse,recycling,and waste reduction potential.Link:https:/ Circularity Indicator(MCI)Author/Publisher:Ellen MacArthur Foundation A quantitative tool assesses product-level circularity by analysing material inputs(virgin/recycled sources)and end-of-life outputs(recovery/recycling rates),enabling companies to identify supply chain opportunities and benchmark performance against circular economy principles.Link:https:/ellenmacarthurfoundation.org/material-circularity-indicatorNational Circularity Assessment Framework for BuildingsAuthor/Publisher:GlobalABC,Government of Finland,UNOPS,UNEP and UN-Habitat A comprehensive tool designed to evaluate and enhance circularity in the building and construction sector,providing measurable indicators to minimise resource extraction,reduce environmental impacts,and improve socio-economic outcomes,aligned with global sustainability goals like the SDGs and Paris Agreement.Link:https:/www.oneplanetnetwork.org/programmes/circular-built-environment/National-Circularity-Assessment-FrameworkTechnology-Material-Design(TMD)Circularity Assessment FrameworkAuthor/Publisher:Ericson K.S.Lau,Daniel W.M.Chan,Benjamin I.Oluleye and Timothy O.Olawumi(2025)A structured evaluation tool integrates smart technologies(e.g.,BIM,IoT),sustainable material metrics (e.g.,recyclability,embodied energy),and circular design principles(e.g.,modularity,adaptive reuse)to quantify building circularity,optimise resource efficiency,and guide policy and industry decision-making toward a zero-waste construction sector.Link:https:/doi.org/10.20944/preprints202502.1982.v152.BUILDING AND CONSTRUCTION MATERIALS HONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK2.Building and Construction MaterialsAll materials and buildings contribute to carbon footprints through resource extraction,production,and repurposing.The construction industry faces a surge in material use,necessitating alignment with global carbon budgets.Circular materials,both conventional and alternative,offer eco-friendly options through resource efficiency.Greater adoption of circular principles is vital to curb emissions and promote sustainable practices in construction.This chapter explores the significance of building and construction materials to illustrate the potential of circular economy practices in the built environment.Key industry recommendations include driving circular material use to promote sustainability,reducing resource consumption by reusing existing materials,and localising the supply chain to benefit both the environment and local economies.Waste is aDesign Flaw:ValuingEvery Resource62.BUILDING AND CONSTRUCTION MATERIALS HONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK2.1 Digital Material PassportsConceptA material passport details building materials characteristics and value for reuse and recycling in larger markets.Developed primarily in Europe,it includes tools like Life Cycle Analysis and Environmental Product Declarations.Digital databases track products for refurbishment or reuse,promoting transparency and showcasing materials residual value,turning buildings into material banks.Case StudyCIG Green Product CertificationThe CIC Green Product Certification evaluates building materials and products across sustainability criteria,including carbon footprint,toxicity,and ecosystem impacts.By mandating transparency,certified products data,such as GHG emissions and resource efficiency,is publicly accessible,mirroring Digital Material Passports that track materials life cycle value.This fosters informed decisions for reuse,recycling,and low-carbon procurement,advancing circularity in construction.Link:https:/cicgpc.hkgbc.org.hk/2.2 Buildings as Material BanksConceptEvery component within a building holds value,often discarded in landfills or for energy recovery during renovations or demolition.Embracing buildings as“material banks”,materials become resources for reuse,recycling,or upcycling in a circular economy,fostering demand for repurposed building elements and necessitating precise material documentation.Case StudyMaterial Exchange PlatformCIC Material Exchange Platform(CIC MEx)is a web-based waste-to-resources match-making marketplace for buying,selling,exchanging or giving away used construction products or materials in construction.It connects stakeholders,including contractors,suppliers,clients and even recyclers,to optimise the reuse and recycling of construction waste.Users can list and source any construction materials they wish to trade or give away or exchange in the material pool,and all the material flows will be logged for subsequent analysis,measuring how much waste has been diverted from disposal.The primary goal of this platform is to foster a culture within the industry to view waste as a resource,contributing to the circular economy.The platform will be launched in 2026.Case StudyiBEAM UnisoniBEAM Unison platform supports Buildings as Material Banks principles by leveraging BIM data for sustainability analysis and life cycle insights,though it does not explicitly create Digital Material Passports.Its focus on streamlining BEAM Plus certifications and material tracking via BIM lays groundwork for future integration of circular economy frameworks,such as documenting material reuse potential which is a key aspect of material banking.Link:https:/ibeam.hk2.3 Locally Sourced MaterialsConcept Localising the supply chain offers significant environmental and economic benefits by reducing energy consumption and emissions associated with material production and transportation.By sourcing materials locally,carbon footprints decrease,positively impacting climate change.This approach also fosters entrepreneurship,potentially creating job opportunities for marginalised groups like women and young individuals entering the workforce.Case StudyEcoParkEcoPark,Hong Kongs recycling hub operated by the Environmental Protection Department,transforms local waste(wood,plastics,glass)into resources.By processing materials within the city,it supports locally sourced materials,slashing transport emissions and fostering a circular economy.This reduces reliance on imports,bolsters local recycling industries,and creates jobs,aligning sustainability with community-driven economic growth.Link:https:/.hk/2.4 Responsible and Healthy MaterialsConceptGlobal organisations advocate for environmentally friendly,healthy,and low-carbon products to facilitate a circular economy.Initiatives like“Mindful Materials”and the GBCA(Green Building Council of Australia)s“Responsible Products Framework”establish criteria based on industry standards like EPDs and HPDs,emphasising impacts on people,place,and planet.Despite variations,consensus is growing on the essential attributes of responsible products.Case StudyCIG Green Product Certification Environment LabelThe upgraded scheme of CIC Green Product Certification groups the assessment criteria of each product category into five labels,namely Carbon,Resource,Environment,Performance and InnoSmart label.The Environment Label recognises products that prioritise both human health and environmental protection.Products awarded this label have demonstrated a commitment to responsible manufacturing and creating healthier,and eco-friendly offerings.Link:https:/cicgpc.hkgbc.org.hk/2.5 Urban Mining and Material CascadingConceptUrban mining involves reclaiming materials from city waste streams,treating urban waste as valuable resources for monetisation.Demolition practices often hinder material separation.Material cascading enhances resource efficiency by reusing products for maximum economic value across life cycles,prioritising reuse over energy recovery to minimise carbon emissions.This concept demonstrates the sequential use of materials applicable to construction materials in the built environment.72.BUILDING AND CONSTRUCTION MATERIALS HONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKCase Study(1)Upcycling Waste Glass at Murray HouseMurray House transformed 33,800 recycled glass bottles into 13,500 paving bricks via Material Take-backcollecting site waste for local remanufacturing.Partnering with recyclers,glass was upcycled into durable,low-carbon pavers,reused on-site.This closed-loop process reduces landfill waste,avoids production emissions,and exemplifies circularity by reintegrating materials into construction.BeforeAfterCase Study(2)Upcycling Waste Glass at Landmark AtriumThe Landmark Atrium(“LMA”)renovation exemplifies urban mining by upcycling waste glass into high-value pavers and art,embodying material cascading(maximising resource value before downcycling).Collaborating with local artists and institutions,it reduces carbon footprints,supports community economies,and showcases sustainable construction through circular practices,turning waste into functional,culturally resonant assets.Demolished glass and concrete from LMARecycle concrete and powdered glass into concrete blocks and resend to LMAGlass artwork from the upcycling of demolished glassCase StudyYPARKYPARK,Hong Kongs yard waste recycling centre,processes local fallen trees and garden debris into wood boards,chips,and compost.By transforming locally sourced materials on-site,it reduces landfill reliance,cuts transport emissions,and supports circular reuse,turning regional waste into construction or landscaping resources,advancing carbon neutrality and sustainable urban management.Link:https:/www.ypark.hk/2.6 Material Take-BackConceptMaterial take-back initiatives,typically led by manufacturers or retailers,involve collecting used products from consumers to reintroduce them into the production cycle.This process,often done in partnership with logistics and processing firms,reduces the need for new materials,promotes better design for reuse,and offers various benefits such as improved customer relationships,cost savings through secondary material supply,access to critical raw materials,reduced risks related to hazardous substances,and lowered environmental impacts.Case StudySmart Waste Management ToolCIC Smart Waste Management Tool digitises C&D waste data handling,enabling stakeholders to input,validate,and approve disposal records.It generates monthly iBEAM-compliant summaries,forecasts waste,suggests reduction strategies,and provides plan templates.The dashboard visualises trends and tracks progress,enhancing compliance,transparency,and efficiency in waste management.The tool supports material take-back by tracking and optimising waste data,identifying reusable materials,and aligning waste reduction strategies with circular economy practices.Link:https:/smartwaste.cic.hkCase Study(3)Resource Recovery of Demolished Timber&Broken Concrete The Princes Building renovation employs Material Take-back to recycle 900m of timber into decking accessories and broken concrete into partition blocks via EcoPark and local manufacturers.This diverts waste from landfills,reduces virgin material demand,and lowers carbon emissions,exemplifying circular construction through resource recovery and closed-loop reuse.Collaboration with recyclers fosters sustainable practices and circular economy principles.BeforeAfterBeforeAfter82.BUILDING AND CONSTRUCTION MATERIALS HONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKCase Study(4)Upcycling Plastic Waste to Low-carbon BricksEcoBricks transform non-recyclable plastics into durable construction materials,replacing 50%of natural aggregates in concrete.Aligning with Material Take-back,they divert mixed/composite plastics from landfills,repurposing waste into certified,low-carbon bricks.The cold-process production avoids emissions,reduces mining impacts,and cuts embodied carbon,supporting circularity by reintegrating waste into building cycles.Water Barriers ShreddedEcoBricks2.7 Carbon-Storing MaterialsConceptCarbon storage in construction materials is crucial for meeting net-zero carbon goals in the built environment.Using tools for embodied carbon accounting can help prioritise materials that store carbon over those that emit it.Carbon can be stored in building materials through bio-based products,derived from living organisms,or mineral carbonation processes where carbon dioxide reacts with minerals to create stable carbonates for construction use.Case Study(5)Carbon-neutral Structural Biochar ConcreteBiochar aggregate for concrete converts biomass waste into carbon-storing materials via pyrolysis and densification,locking in CO.Core-shell encapsulation reduces water absorption(7 MPa).Used in structural-grade concrete(C40 strength,52 MPa),it achieves net-zero emissions(-10 kg COe/m),offsetting cements carbon footprint while transforming waste into durable,climate-positive building materials.Raw loose biocharCarbon-neutral Structural Biochar Concrete93.DESIGN AND RETROFITHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK3.Design and RetrofitBuilding and infrastructure designers have the potential to challenge conventional practices by promoting innovative designs that encompass an assets entire life cycle.Embracing circular design and construction presents environmental and socio-economic advantages when executed with appropriate strategies.This approach necessitates a holistic view from stakeholders to ensure long-term considerations for the procurement,maintenance,and retention of building elements value across multiple life cycles.This chapter advocates for circular building design by urging stakeholders to shift from short-term to long-term thinking.It emphasises designing for reuse over multiple lifetimes,disassembly,and deconstruction to eliminate waste.Implementing circular economy principles aims to minimise material usage and achieve zero-to-landfill targets efficiently.Build for Tomorrow:Designing Out Waste&Designing In Value103.DESIGN AND RETROFITHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK3.1 Design for Reuse Over Multiple LifetimesConceptFocuses on creating buildings with inherent adaptability and resilience,enabling adaptive reuse across changing societal needs.By prioritising flexible layouts,modular systems,and durable structural frameworks,buildings evolve through retrofitting instead of demolition.This approach minimises embodied carbon from new construction,extends life cycle utility,and aligns with net-zero goals by preserving and repurposing existing structures,transforming them into dynamic assets for future generations.Case StudyHKGBC Retrofitting GuidebookHKGBC Retrofitting Guidebook outlines strategies for holistic building retrofits,energy audits,system optimisation,and future-proofing upgrades,to extend building life cycles.By prioritising adaptable infrastructure,resilient systems,and compliance with sustainability codes,it supports design for reuse over multiple lifetimes,enabling structures to evolve with minimal demolition.This reduces embodied carbon and aligns retrofits with long-term circular economy goals.Case Study(6)Hong Kong Repertory Theatre Education HubHKREP Education Hub revitalises a 1902 heritage building to a theatre education centre through adaptive reuse,preserving its structure while upcycling materials(e.g.converting window glass into glass blocks).Material audits and modular updates extend its lifespan across generations,exemplifying design for reuse over multiple lifetimes.This sustainable transformation fosters community engagement and ecological stewardship,blending historical preservation with modern functionality.Upcycling existing window glass to glass blocks for new wall constructionCase Study(7)ATAL TowerATAL Tower,transformed from an industrial building via Hong Kongs Revitalisation Scheme,exemplifies Design for Reuse Over Multiple Lifetimes by retaining 90%of its structure.Smart systems(BIM,AI)optimise MEP efficiency and predict future needs,while adaptable green spaces ensure flexibility.This extends lifespan,reduces embodied carbon,and supports evolving functions through modular,tech-driven sustainability.3.2 Design for Disassembly and DeconstructionConcept Designing for the disassembly and deconstruction of buildings aims to recover the assets residual value at the end of its life cycle.This approach transforms buildings into material banks,simplifying maintenance,retrofitting,and reuse.Prioritising reuse and recycling over demolition is crucial to reduce waste.Deconstruction,involving selective dismantling,retains the original value of components.Simplifying design with fewer parts and standardised fasteners eases disassembly.Training in disassembly techniques is essential for efficient building component reuse.Case StudyGreen Design Guide for Material Resources Optimisation in Building Life CycleThis Green Design Guide tackles Hong Kongs building material waste by optimising resource use across the construction life cycle.It integrates Business Process Reengineering and Building Information Modelling in design,promotes efficient construction methods,adaptable designs for future needs,and“Design for Demolition”to prioritise material reuse.Recommendations span planning,construction,occupancy,and demolition to minimise waste holistically.The Guide aligns with“Design for Disassembly”by prioritising deconstruction planning,simplified components,and material reuse over demolition to recover value at life cycle end.Link:https:/www.hkgbc.org.hk/eng/engagement/guidebooks/green-design-guide/green-design-guide.jspCase StudyNam Cheong Street Modular Social Housing Project (“Nam Cheong 220”)Nam Cheong 220,Hong Kongs first transitional housing project using modular integrated construction(MiC),was relocated from Sham Shui Po to Tai Po for reuse.Designed for modular adaptability,standardised components ensure disassembly ease,material durability,and extended lifespan.MiC reduced construction time to under a year,housing 94 households.Emphasising circular construction principles,it prioritises closed-loop resource use,minimising waste while supporting sustainable,multi-lifetime social housing solutions.The project demonstrates scalable,future-ready design for repeated redeployment.Link:https:/mic.cic.hk/en/ProjectsInHongKong/3113.DESIGN AND RETROFITHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK3.3 Design Out WasteConceptTo implement a circular economy,efficient resource use and waste reduction are paramount.Sustainable waste management,emphasising reuse,recovery and recycling,is crucial.Planning for minimal waste generation and efficient waste handling and utilisation is key.Transparent data on material recovery and destinations is essential for achieving a zero-to-landfill goal and fostering sustainable waste practices.Waste of other resources like food waste,water,heat and other forms of energy can also be eliminated by design.Case Study(8)Standard Chartered Bank Building,Gala PlaceSCBB,Gala Place exemplified Design Out Waste by upcycling carpets,ceramic tiles,and century-old timber into new interiors,while reusing 4,439 furniture items(donated to NGOs/colleagues).This circular approach diverted 603,186 kg COe and 180,881 kg of landfill waste,prioritising resource efficiency and zero-waste goals through sustainable material choices and transparent reuse strategies.Converting hundred-year-old tree trunks as reception counterCase Study(9)Hang Seng Bank HeadquartersHang Seng Bank Headquarters employs Design Out Waste by reclaiming over 50%of landfill-bound materials.Repurposing 210 tonnes of granite/glass into art installations and diverting 210 tonnes of construction waste via sorting,it transforms demolition debris into high-value elements like bamboo-themed screens and granite pools,prioritising closed-loop material cycles to minimise landfill reliance and advance circular construction practices.Bamboo-themed screen124.REGENERATE NATUREHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK4.Regenerate NatureA regenerative model mimics natural systems,emphasising sustainability for both people and the planet.Current global practices threaten biodiversity and exceed environmental limits.A circular economy could alleviate this by reducing material use.Public awareness is driving businesses to address biodiversity crises.This chapter explores how the built environment can promote the regeneration of natural systems through widespread implementation of circular economy solutions in line with industry calls to action.Drawing inspiration from natures efficiency,our city can adopt nature-based solutions to close material loops and enhance the connection between urban areas and natural systems.Emphasising water conservation and quality throughout the building life cycle,including reporting water usage during construction and operation,is vital for sustainable practices.Beyond Less Harm:Building that Gives Back to Nature134.REGENERATE NATUREHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK4.1 Inspiration and Implementation of Nature-Based SolutionsConceptThe built environment draws on nature for inspiration,aiming to minimise waste and ensure sustainable development.Nature-Based Solutions(NBS)in real estate enhance resilience and reduce resource consumption.These solutions lower energy usage,improve urban environments,and increase climate resilience,especially in coastal areas,nurturing ecosystem regeneration.Case Study(10)Reuse of RainwaterReuse of Rainwater,as exemplified by the case study of One Causeway Bay,embodies Nature-Based Solutions by mimicking natural water cycles.Captured stormwater irrigates landscapes and cools buildings,reducing potable water use by over 50%while easing drainage burdens.This closed-loop system cuts urban flooding risks and operational costs,showcasing how NBS can transform cities into climate-resilient,resource-efficient ecosystems.Rainwater recycling system4.2 Natures Efficiency:Utilising Essential Matter OnlyConceptHoneycomb-like structures in bones inspire efficient building practices.By thoughtful design,locally sourcing materials and emphasising resource renewal,structures can be designed with reduced material requirements,lessening dependence on rare or non-renewable resources extracted from distant locations.4.3 Embracing Resilience Over Performance OptimisationConceptFrom the intricate architecture of a spiders web to the flexibility of a bamboo plant,nature has perfected the art of building structures that can withstand external pressure.For instance,the spiders web is not only strong enough to catch prey,but also has the ability to absorb and disperse the force of wind or rain,preventing it from collapsing.Similarly,the bamboo plants hollow,yet flexible,stem allows it to bend without breaking during storms.By understanding the principles behind these structures,we can design and build resilient buildings and infrastructure.4.4 Natural Decomposition:The Simplicity of Materials in Natures CycleConceptNature simplifies materials for easy decomposition,unlike human-made complex and challenging-to-recycle objects.Envision composite materials with fibres and matrices of a single material but arranged uniquely.Upon reaching their lifespan,these products seamlessly revert to raw materials,fostering reusability and sustainability.4.5 Natures Resource Efficiency:Multifunctional Utilisation in the Natural WorldConceptLiving organisms utilise multifunctional solutions,such as a trees leaf acting as a solar panel,evaporator,and insulating parasol.These solutions are redundant and decentralised.Designing buildings based on these principles promotes longevity and versatility,allowing structures to serve multiple purposes throughout their lifespan.Case Study(11)Local Reclaimed WoodLocal Reclaimed Wood demonstrates Natures Resource Efficiency by repurposing typhoon-felled urban trees into architectural elements like reception counters and benches.This approach minimises transport emissions,maintains carbon storage,and showcases multifunctional use of materialsturning potential waste into valuable resources while supporting sustainable construction and local circular economies.Typhoon-felled urban treesRepurpose typhoon-felled urban trees into reception counters and benchesCase Study(12)Oyster Shell UpcyclingOyster Shell Upcycling exemplifies Natures Resource Efficiency by transforming restaurant waste into cement raw material,replacing over 17 tonnes of mined limestone.The shells high calcium carbonate content(91%)mirrors natural mineralisation processes,reducing landfill burdens and quarrying impacts.This circular innovation demonstrates how urban waste streams can emulate ecosystems multifunctional resource use,creating industrial value from discarded biomaterials.144.REGENERATE NATUREHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK4.6 Regenerative Urban Development:Reversing Climate Crisis and Biodiversity LossConceptUrban expansion exacerbates climate change and biodiversity loss.Cities,major consumers of resources,can combat these issues.Regenerative urban planning focuses on replenishing resources like food,energy,and water locally.By integrating nature into city design,urban areas can become more self-sufficient and resilient,promoting community well-being.Case Study(13)Biodiverse GardenTaikoo Square at Taikoo Place exemplifies Regenerative Urban Development by integrating more than 70,000 sq.ft.of additional green space with over 260 native/exotic plant species(20%native),promoting urban biodiversity.A number of feng shui woodlands tree species were procured from the Kadoorie Farm and Botanic Garden in 2018,and they were carefully taken care of from seedlings in the garden nursery and transplanted to Taikoo Square in 2024.These plants restore habitats for wildlife while mitigating heat island effect,increasing rainwater retention and enhancing air quality.This nature-based approach marks the next stage of Swire Properties sustainability journey as they advocate nature-based solutions to address biodiversity loss and to fight climate change.Green spaceCase Study(14)Urban Native Woodland With more than 200 species of flowers and trees at CIC-Zero Carbon Park,as Hong Kongs first urban native woodland since its opening in 2012,the areas natural heartland brings in birds and other animals start creating a very biodiversified environment,to make it become a lush and vibrant sanctuary for visitors to relax in.CIC-ZCP creates a paradigm shift towards sustainable living,and functions as“green lungs”for the high-density environment,breathing clean air and new life into Hong Kong.CIC-Zero Carbon Park155.LEVERS FOR CHANGEHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK5.Levers for ChangeFor a widespread shift towards sustainability,stakeholders throughout the supply chain need to embrace circular practices.A systemic transformation demands active participation from all sectors.Establishing a strong value proposition is essential to engage actors in the built environment,spanning public and private domains.This chapter explores vital strategies to expand circular economy solutions in line with industry demands.It emphasises the necessity of implementing new business models like product-as-a-service and remanufacturing.Enhancing data availability and incentivising participation in circular value chains through ESG reporting is crucial.Certification schemes should align with circular principles,while education and skills development are key to fostering a circular mindset.Collaborative partnerships across the value chain are essential for driving circular economy initiatives forward.Shifting the System:The Business,Finance&Policy of Circularity165.LEVERS FOR CHANGEHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK5.1 Product as a ServiceConceptThe adoption of innovative business models,like Product as a Service,plays a vital role in promoting the circular economy and cultivating a closed-loop system.Service-oriented models enhance product utilisation by offering the“use”of products instead of outright procurement,encouraging suppliers to extend product lifespans through reuse.Case Study(15)WEEE PARKWEEE PARK demonstrates Product as a Service by refurbishing and donating over 10,000 e-waste appliances (e.g.,TVs,fridges)to low-income families,extending product life cycles through reuse.Its service-oriented modelcollecting,detoxifying,and redistributing electronicsprioritises access over ownership,reducing virgin resource demand and fostering circularity while offering social value through community-centric solutions.Case Study(16)OPARK2OPARK2 embodies Product as a Service by offering continuous waste-to-resource conversion over a 15-year operational contract.It provides renewable energy (45 GWh annually)and organic fertilisers as ongoing services,while maintaining self-sufficient heat/water systems.This service model transforms waste treatment into a circular utility,prioritising long-term resource recovery over single-use outputs and fostering industrial symbiosis.5.2 Circular ProcurementConcept Consumers exert influence through selecting reused,recycled,and nontoxic items to promote circular practices.A persuasive value proposition is essential for a widespread shift,demanding united endeavours from businesses and individuals.Procurement stands as a pivotal avenue to integrate circular economy principles on a large scale.Case Study(17)Circular Procurement for ConstructionCircular Procurement for Construction prioritises resource loops,as seen in Gammons initiative converting local waste cooking oil(WCO)into B5 biodiesel for machinery.Partnering with Jardines,ASB Biodiesel,and Chevron,this cross-sector model diverts WCO from landfills,cuts fossil fuel reliance,and establishes a closed-loop supply chaindemonstrating how procurement can drive sustainability,reduce emissions,and foster industrial symbiosis in construction.Waste to energy5.3 Corporate LeadershipConceptLeadership in advancing the circular economy demonstrates socio-economic benefits such as cost savings and resource security.Measurable strategies create a compelling business case,fostering mass-market interest through knowledge-sharing and reporting.Organisations can enhance ambition and normalise circular economy practices across sectors.Case Study(18)Links Tenant Fit-out Circular ModelLinks Tenant Fit-out Circular Model prioritises material reuse during tenant transitions,extending the lifespan of ceilings,flooring,partitions,and furniture.By collaborating with tenants to redesign spaces using retained elements,it reduces fit-out waste(e.g.,4 tonnes saved in one case),lowers costs($2M saved),and cuts carbon emissions.This closed-loop approach aligns with circular economy principles by minimising landfill reliance and fostering resource-efficient retail ecosystems.BeforeAfterBeforeAfter175.LEVERS FOR CHANGEHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK5.4 ESG FrameworksConceptESG is gaining prominence in mainstream finance,showcasing the worth of sustainability.Factors like renewable energy and waste management influence ESG ratings.The circular economy is recognised as a solution to global challenges.Using data-driven tools,ESG reporting can accelerate circular practices.Businesses leverage ESG to promote circularity through robust reporting,innovation,and industry collaboration.Case Study(19)Swire Properties Embodied Carbon Management StrategySwire Properties was the first developer in Hong Kong to adopt low-carbon specifications for new development projects.It actively collaborates with suppliers to identify opportunities for enhancing sustainability across the supply chain.This includes promoting circularity by prioritising material reusesuch as PFA and GGBS concrete and reclaimed steeland assessing cradle-to-gate environmental impacts through Environmental Product Declarations(EPDs).Technologies like Building Information Modelling(BIM)are leveraged to minimise construction waste.To drive embodied carbon reduction from construction materials,Swire Properties has set Science-Based Targets(SBTs),aiming to reduce embodied carbon emissions by 25%by 2030,compared to a 2016/18 baseline.In 2024,with the support of HKUST,Swire Properties completed embodied carbon calculation for Six Pacific Place,showing that the upfront embodied carbon emissions of Six Pacific Place were 19,601 tonnes of COe,and 637 kg of COe per square metre construction floor area.An 18crease in carbon intensity is achieved compared to our 2016-2018 baseline year.This was attributed to:100%of low-carbon concrete procured had CIC Green Product Certification 65%of rebar procured contained more than 60%recycled content Grid power was connected during construction and no on-site generators were used,minimising noise and air pollution and reducing site carbon emissions.5.5 Sustainable Finance DriversConceptThe evolving investment landscape underscores sustainable finance as a significant trend.Companies gravitate towards ESG-focused funds,reflecting a rising interest in sustainable practices.Demonstrating robust supply chains and ethical records enhances resilience against environmental and reputational risks.Mitigating climate and societal challenges is crucial for asset protection and portfolio sustainability.Case StudyCIC Sustainable Finance Certification SchemeCIC SFCS aims to provide a common framework and user-friendly assessment system to facilitate the application of sustainable finance for the construction industry in Hong Kong and the Greater Bay Area.Case Study(20)Circular Economy ModelGammons Circular Economy Model converts concrete waste into aggregates via partnerships(e.g.,Tiostone),reducing landfill reliance and emissions.Aligned with Sustainable Finance Drivers,it enhances ESG appeal for green investments,strengthens supply chain resilience,and lowers climate risks,key for attracting ESG-focused funds and ensuring long-term financial viability through ethical resource loops.Concrete waste186.CASE STUDIES OF HONG KONG CIRCULAR PRACTICEHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOK6.Case Studies of Hong Kong Circular PracticeHKGBC,CIC and BEC do not conduct their own assessment of the case studies included in this Guidebook.The results presented here are those shared by the case study contributors and their project team.HKGBC,CIC and BEC staff have scrutinised the findings and asked for follow-up where necessary to ensure the accuracy of the details provided,but cannot attest to their accuracy.HKGBC,CIC and BEC encourage readers of this Guidebook to engage with the case study contributors where questions or clarifications arise.Circularity In Action:Proven Pathways forHong Kong196.CASE STUDIES OF HONG KONG CIRCULAR PRACTICEHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKNumberBuilding/Project NameCircular Initiative1Murray House,Stanley Plaza2.5,2.7,3.1,5.22Landmark Atrium2.3,2.4,2.5,5.23Princes Building2.5,2.6,5.24Hong Kong Gold Coast2.5,2.6,3.35Biochar Aggregate and Concrete2.76Hong Kong Repertory Theatre Education Hub2.2,2.5,3.1,3.37ATAL Tower3.18Standard Chartered Bank Building,Gala Place2.2,2.3,2.4,2.6,3.1,3.39Hang Seng Bank Headquarters2.4,2.6,3.1,3.3,4.1,4.610One Causeway Bay2.3,2.4,4.1,4.311Towngas Headquarters Building2.3,2.4,4.512The Langham,Hong Kong&Eaton HK2.5,2.6,3.3,4.1,4.513Taikoo Square at Taikoo Place4.1,4.5,4.614CIC-Zero Carbon Park2.3,2.6,4.5,4.6,5.215WEEE PARK2.5,2.6,5.116OPARK 22.5,3.3,5.117Waste Cooking Oil to Biodiesel2.3,5.2,5.318Links Hong Kong Retail Properties3.1,4.319One Taikoo Place,Two Taikoo Place,Six Pacific Place,EIGHT STAR STREET2.2,2.4,2.5,2.6,3.1,4.3,5.2,5.420Turning Concrete Waste into Blocks and Pavers2.6,5.2,5.5Circular Initatives:Building and Construction Materials2.12.22.32.42.52.62.7Digital Material PassportsBuildings as Material BanksLocally Sourced MaterialsResponsible and Healthy MaterialsUrban Mining and Material CascadingMaterial Take-BackCarbon-Storing MaterialsDesign and Retrofit3.13.23.3Design for Reuse Over Multiple LifetimesDesign for Disassembly and DeconstructionDesign Out WasteRegenerate Nature4.14.24.34.44.54.6Inspiration and Implementation of Nature-Based SolutionsNatures Efficiency:Utilising Essential Matter OnlyEmbracing Resilience Over Performance OptimisationNatural Decomposition:The Simplicity of Materials in Natures CycleNatures Resource Efficiency:Multifunctional Utilisation in the Natural WorldRegenerative Urban Development:Reversing Climate Crisis and Biodiversity LossLevers for Change5.15.25.35.45.5Product as a ServiceCircular ProcurementCorporate LeadershipESG FrameworksSustainable Finance Drivers206.CASE STUDIES OF HONG KONG CIRCULAR PRACTICEHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKPaving the Way with Recycled GlassCASE STUDY(1)Murray House,Stanley PlazaInformation of Circular PracticeBuilding Owner:Link Asset Management LimitedBuilding Name:Murray House,Stanley PlazaDescription of the Building:Stanley Plaza is a unique lifestyle destination situated on the picturesque waterfront of Stanley on Hong Kong Islands south side,adding to Stanleys well-known main street and heritage landmark Murray House.Circular Practice:A paving renovation project was undertaken at Murray House in Stanley Plaza to address safety concerns caused by the deterioration of existing outdoor blocks.The weathered and uneven surface presented a potential hazard to visitors and tenants,necessitating a prompt and effective solution.The project involved a partnership with the local company Tiostone to implement an innovative,sustainable paving system using bricks manufactured from recycled materials.Project Details:Period:December 2024 Location:Murray House,Stanley Plaza Total Working Area:270m Bricks Utilised:13,500 Tiostone bricks,each meticulously crafted from 2.5 recycled glass bottles blended with cement,totalling 33,800 recycled glass bottles usedCircularity:The project demonstrated a practical model of a local circular economy.Glass waste collected from the site and other locations by the designated recycler,Baguio,was supplied to Tiostone as raw material for brick production.The newly manufactured bricks were then installed at their point of origin,Murray House,effectively closing the waste loop on the same property and minimising transportation emissions.Project Highlights:Environmental Impact:TiO APR(Carbon-Capture)Paving Blocks reduce air pollutants and enhance air quality by not generating greenhouse gases during production.Waste Reduction:The use of recycled materials in the blocks helps reduce construction waste in landfills,promoting a more sustainable construction process.Innovation:It showcases the potential of upcycling materials for construction purposes.Local Economic Support:The initiative reinforced the local circular ecosystem by leveraging local recyclers,manufacturers,and vendors,thereby supporting Hong Kongs circular economy objectives.Quality Assessment and Control:The selection of materials for this project was preceded by a two-year period of rigorous quality assessment focused on enhancing the durability of upcycled construction materials.Benefits to the Project:It demonstrates the functional viability of upcycled materials in demanding construction applications.Benefits to the Industry:This practice promotes cross-sector collaboration that enhances resource efficiency,encourages innovation,and advances sustainable methodologies across the supply chain.Benefits to the Environment:The process achieves a reduction in demand for virgin materials,thereby minimising resource extraction.Circular Initiatives:2.5,2.7,3.1,5.2Name of consultant/contractor/manufacturer:Tiostone Environment LimitedCosts:HK$520,000 Material Saving:13,500 bricks Carbon footprint:150 kg COe avoided by sending glass bottles to the landfillYear of completion:2024 216.CASE STUDIES OF HONG KONG CIRCULAR PRACTICEHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKCircular Initiatives:2.3,2.4,2.5,5.2Name of consultant/contractor/manufacturer:Allied Environmental Consultants Limited(Sustainability Consultant)Gammon Engineering and Construction Company Limited(Main Contractor)Aedas(Architect)Carbon footprint:22%reduction Year of completion:2026Building Owner:The Hongkong Land LimitedBuilding Name:Landmark AtriumDescription of the Building:Landmark Atrium is an iconic luxury shopping mall in Central,Hong Kong.As a key part of the transformation plan for Tomorrows CENTRAL,it embodies a commitment to sustainability through extensive green measures.These initiatives include a comprehensive strategy for material use and waste management which demonstrates a strong sense of eco-consciousness while elevating the retail and lifestyle experiences for customers.Information of Circular PracticeCircular Practice:Throughout the renovation work,adherence to in-house carbon reduction targets with a target of at least 22%reduction in embodied carbon was maintained.The use of green concrete and green rebar contributed to reduced transportation emissions and energy consumption,supporting a more sustainable construction process.Locally sourced concrete,infused with injected recycled CO2 and certified as a CIC Green Product was utilised for structural work,which both supported the local economy and demonstrated reduced embodied carbon across material manufacturing and construction processes.A comprehensive carbon management plan was provided to subcontractors to ensure effective carbon tracking and optimised material use in meeting carbon reduction targets.The project adhered to Green Procurement Guidelines and referenced international frameworks like the WorldGBCs Circular Built Environment Playbook and the 10R framework to enhance circularity,incorporating materials with high recycled content,such as structural steel with weighted 90%recycled content,and prioritising those with Environmental Product Declarations(EPDs)for life cycle impact transparency and Health Product Declarations(HPDs)for health and safety.These circular procurement criteria,including the use of locally sourced materials,were integrated into contract specifications,with contractors monitoring material submissions and procurement during A&A works to ensure compliance with sustainability targets.The renovation exemplified urban mining and material cascading by upcycling concrete and waste glass from on-site demolition into high-value building materials through collaborations with local institutions.Glass was crushed into powder and repurposed into concrete blocks for use as partition walls,maximising resource utility.Also,crushed glass has been integrated into glass artwork to enhance sustainability by creating gift sets inspired by local artistry.By engaging local expertise,the project fostered community involvement and supported the regional economy,further promoting environmental responsibility.Benefits to the Project:By referencing HKLs in-house Green Procurement Guidelines and the WorldGBCs 10R framework,the project integrates concepts for A&A work to promote a more sustainable built environment:Re-evaluating traditional building methods to identify sustainable practices enables a comprehensive plan for material use and waste management through reusing exisiting materials and using recycled and locally sourced options.Upgrading sanitary fitments and building service systems enhances operational efficiency and significantly reduces carbon emissions.Recycling glass and repurposing it into craftwork,concrete blocks,and sandbags creates opportunities for reusing materials,addressing end-of-life considerations effectively.Benefits to the Industry:Encouraging cooperation between manufacturers,contractors,and local communities,circular practices improve resource pooling and knowledge exchange.Fostering more robust supply chains that are less susceptible to worldwide disruptions by relying on locally produced and repurposed products.Benefits to the Environment:Using recycled and locally sourced materials significantly reduces transportation emissions and the carbon footprint of new material production.Developing a method to recycle demolished glass into concrete blocks and sandbags on-site creates opportunities to reuse and minimise construction waste for future generations.Upcycling demolished finishes into community living spaces facilitates material reuse,helping to reduce and repurpose waste.Promoting recycling and repurposing practices significantly diverts construction and demolition waste from landfills.Divert,Upcycle,ReintegrateCASE STUDY(2)Landmark AtriumCrushed Glass from removed shopfront&facadeUpcycled Glass GiftsetRecycled Glass SandbagArtists impression only by Hongkong Land226.CASE STUDIES OF HONG KONG CIRCULAR PRACTICEHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKCircular Initiatives:2.5,2.6,5.2Name of consultant/contractor/manufacturer:Gammon Construction Limited(Demolished timber decking and broken concrete provider,timber decking accessories and partition concrete block user)Sincere Building Materials Limited(reprocessing broken concrete into partition concrete blocks)EcoPark(reprocessing demolished timber decking into timber decking accessories)Information of Circular PracticeBuilding Owner:The Hongkong Land LimitedBuilding Name:Princes BuildingDescription of the Building:The Princes Building Podium Conversion Project,part of Hongkong Lands“Tomorrows CENTRAL”initiative,involves the comprehensive redevelopment of the retail podium from Basement to 5/F.The project aims to elevate the architectural quality,structural performance,and overall retail experience in alignment with the LANDMARK brand.Circular Practice:This circular practice has advanced material circularity through two key initiatives:the recycling of demolished timber decking and the processing of broken concrete from Princes Building.It involves systematic recycling of demolished timber decking and broken concrete through a material take-back programme in collaboration with processing partners,reducing the need for new materials and enabling reuse by both the manufacturer and the project team.At Princes Building,approximately 900m of timber decking was removed from the fourth-floor flat roof and transferred to EcoPark for recycling.The material was subsequently transformed into timber decking accessories,supporting sustainable resource management.Moreover,several hundred tonnes of broken concrete from demolition work were sorted and sent to a local partition block manufacturer,Sincere Building Materials Limited.The material was recycled into partition concrete blocks.The project utilised products from the same manufacturer to improve process efficiency and support a cohesive circular economy.Benefits to the Project:This initiative improved project efficiency by reducing waste management requirements and diverting material from landfills and public fill.It also decreased the need for new materials in product manufacturing.By demonstrating a commitment to circularity,the practice enhanced project value while establishing a benchmark for future sustainable construction projects.Benefits to the Industry:This practice fosters cross-sector collaboration with recycling and manufacturing partners,supplying recycled materials and stimulating innovation in the application of reclaimed resources.Such partnerships promote industrial circularity and encourage circular procurement practices through the specification and use of recycled materials.This approach sets a beacon example and encourages other companies to adopt similar methods,thereby fostering a more resilient and sustainable supply chain.Benefits to the Environment:Environmentally,these initiatives significantly reduce waste directed to landfills and public fill and minimise the carbon footprint associated with material production.By recycling timber decking and broken concrete,the practice conserves natural resources and lowers demand for virgin materials.From Demolition Debris to Premium ResourcesCASE STUDY(3)Princes Building236.CASE STUDIES OF HONG KONG CIRCULAR PRACTICEHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKCircular Practice:This circular practice involves the deployment of construction materials manufactured with recycled content,utilising a closed-loop system that converts local waste into resources.EcoBricks entire production and waste processing occurs within Hong Kong,offering a circular solution built on local waste,local production,and local use.Its first-of-its-kind manufacturing process upcycles all types of plastic waste,including mixed and composite plastics,providing a scalable solution for the citys unrecycled material.A full ISO 14040 Life cycle Assessment demonstrated a 99%reduction in cradle-to-gate carbon emissions compared to traditional building materials.The 100%cold production process requires no heating,emits no pollutants,and replaces up to 50%of natural aggregates in concrete with local plastic waste.Certified to international standards for performance,the lightweight bricks reduce habitat destruction from mining and lower the carbon footprint from shipping aggregates.The minimal processing also results in less energy usage and lower embodied carbon emissions.The solution has received wide recognition,including a Gold Medal at the 2022 Geneva International Exhibition of Inventions.Benefits to the Project:The project at Hong Kong Gold Coast utilised over 15,000 EcoBricks,upcycled from 5,400 kg of plastic waste recovered from 560 used washing machines.To date,the application of EcoBricks has upcycled over 40 tonnes of plastic waste through the deployment of more than 132,600 bricks.Benefits to the Industry:Investment in sustainable materials like EcoBricks supports innovation and the development of new solutions that advance sustainable building practices.The product offers the industry a certified,high-performance building material that addresses the challenge of plastic waste.Benefits to the Environment:The production system provides a fully circular,local solution for managing plastic waste within Hong Kong.The technology demonstrates a 99%reduction in cradle-to-gate embodied carbon emissions compared to traditional building materials.The process reduces habitat destruction from mining and lowers carbon emissions associated with shipping natural aggregates.Circular Initiatives:2.5,2.6,3.3Name of consultant/contractor/manufacturer:EcoBricks LimitedCosts:Sino Group purchased EcoBricks at the same cost as conventional bricks.Thus,there has been no extra cost incurred to achieve carbon savings.Material Saving:EcoBricks can recycle any plastic waste(types 1-7 plastic).Material saving by using plastic waste has been 115 tonnes of virgin aggregates with 40 tonnes of plastic waste(plastic is much lighter than aggregate).Carbon footprint:Carbon emission savings for all projects under Sino Group to date amount to 16.2 tonnes.Year of completion:2021-presentBuilding Owner:Sino GroupBuilding Name:Hong Kong Gold CoastDescription of the Building:Hong Kong Gold Coast is a large-scale,integrated waterfront development spanning several hectares of landscaped greenery.It accommodates over 2,000 residences and provides a comprehensive range of recreational facilities.The precinct has implemented a sustainability initiative,“Gold Coast Green Journey,”which includes the installation of solar panels and smart water dispensers,alongside educational programmes and a green upcycled room showcasing handmade upcycled items,to promote environmental practices.Information of Circular PracticeTurning Plastic Waste into Building BlocksCASE STUDY(4)Hong Kong Gold Coast246.CASE STUDIES OF HONG KONG CIRCULAR PRACTICEHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKName of consultant/contractor/manufacturer:Nano and Advanced Materials InstituteCosts:496 RMB/tonne for biochar core-shell aggregate;757 RMB/m3 for carbon-neutral structural biochar concreteMaterial Saving:Saving 1600kg natural aggregate per cubic metre of conventional concreteCarbon footprint:-214 kg COe/tonne for biochar core-shell aggregate;-26.5 kg COe/m3 for carbon-neutral structural biochar concreteYear of completion:2025Project Owner:Nano and Advanced Materials InstituteProject Name:Biochar Aggregate and ConcreteDescription of the Project:Converting biomass wastes to biochar aggregate and concrete for circular utilisation and sustainable green construction.Information of Circular PracticeCircular Initiatives:2.7Circular Practice:The circular practice involves converting biomass waste into biochar aggregate for use in concrete production.This process outlines a circular economy model for converting biomass waste into a functional construction material with a negative carbon footprint.The practice begins with the pyrolysis of biomass waste,a thermal decomposition process that converts organic material into biochar.This diversion from landfill disposal prevents the release of methane,a potent greenhouse gas.The resulting biochar is subsequently processed through a densification technology,which increases its carbon storage density by more than a factor of two,thereby enhancing its carbon sequestration potential.A core-shell encapsulation technology is then employed to transform the densified biochar into a synthetic aggregate.This encapsulation addresses the inherent challenge of high water absorption in porous biochar,reducing it to below 20%by weight.A concurrent outcome of this process is a significant increase in the aggregates mechanical strength,achieving a crushing strength greater than 7 MPa,which is more than 50 times that of raw biochar.The resulting high-performance biochar aggregate possesses an embodied carbon value of less than-200 kg of CO equivalent per tonne.This negative value allows it to be used as a component in concrete to directly offset the carbon footprint of the cementitious materials within the mix.Through specific concrete formulation,this biochar aggregate can be utilised to produce structural-grade concrete with a compressive strength exceeding 52 MPa(C40 classification).The final concrete product achieves a net negative embodied carbon footprint,quantified as less than-10 kg of CO equivalent per cubic metre.This combination of structural performance and a negative carbon footprint makes it suitable for broad application in construction,contributing to carbon-neutral objectives and sustainable building practices.Benefits to the Project:This circular practice enables the project to achieve a high rate of material recycling and significant carbon dioxide reduction within its concrete mix,all while meeting requisite structural performance standards.Benefits to the Industry:It provides the construction industry with a novel methodology for the sustainable management of biomass waste and a mechanism to increase the recycled content in concrete production.Benefits to the Environment:The practice reduces the volume of biomass waste directed to landfills,decreases the demand for natural aggregates extracted for concrete,and lowers the net carbon emissions associated with concrete production.Concrete That Captures CarbonCASE STUDY(5)Biochar Aggregate and Concrete256.CASE STUDIES OF HONG KONG CIRCULAR PRACTICEHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKCircular Practice:The original three-storey structure was constructed as a private residence in the 1900s.The building underwent a series of transformations over the decades to accommodate various uses such as staff quarters,a school,and an education centre.While the buildings structure was maintained,the internal layout was modified and modernised to suit its multiple uses.Past and present users of the building share the same vision to preserve and enhance its value while redesigning it for new purposes.The buildings lifespan has been extended through the efforts of generations.These circular initiatives are adopted:Adaptively reusing the existing building structure Conducting a materials audit to identify existing materials for reuse,recycling and upcycling Upcycling existing window glass to glass blocks for new wall constructionIn the latest renovation,not only was the building structure preserved,but also some existing building materials were retained,reused,and upcycled for the new centre.A comprehensive material audit was conducted to identify potential“waste”for redesign to give them a second life.For instance,the existing aluminium windows were replaced with soundproofing IGU windows to suit the new centres use for theatre education.The existing window glass was collected by a local supplier to be upcycled and used to create a new glass block wall.The collected glass was broken into pieces and mixed with a designated colour of resin to form the glass blocks.These glass blocks were utilised to construct a new wall in the centre to comply with the latest regulations and create a new learning space for the students.The project not only preserves the buildings authenticity but also promotes community engagement through accessible spaces.It achieves ecological restoration through tree preservation and native planting,making it a model for sustainable heritage revitalisation that benefits the cultural fabric and the community.Benefits to the Project:Upcycling the abandoned window glass to construct new glass block wall to reduce waste.Education and demonstration to future generations on how to reuse“waste”Benefits to the Industry:Demonstration of upcycling existing abandoned materials at site to reuse in new project.Benefits to the Environment:Reduction of waste produced in the change of use of building.Circular Initiatives:2.2,2.5,3.1,3.3Name of consultant/contractor/manufacturer:Tony Ip Green Architects Ltd.Costs:HK$55M Material Saving:glass,timber,metal,concrete Year of completion:2023Information of Circular PracticeBuilding Owner:Hong Kong Repertory Theatre Ltd.Building Name:Hong Kong Repertory Theatre Education HubDescription of the Building:Hong Kong Repertory Theatre Education Hub revitalised a historical building located at 7 Coxs Road at Jordan first constructed in 1902.The proposed centre is a showcase of an innovative sustainable heritage revitalisation project in Hong Kong which not only reinvigorates the historic space but also transforms the existing building into a sustainable centre for theatre education.The proposed centre is a 3-storey Grade II building situated at the heart of the city and hidden by high-rise residential buildings.It has served as an educational place since the 1920s and will be continued in the 21st Century.Historic Heritage,Circular FutureCASE STUDY(6)Hong Kong Repertory Theatre Education Hub266.CASE STUDIES OF HONG KONG CIRCULAR PRACTICEHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKName of consultant/contractor/manufacturer:ATAL Building Services Engineering LimitedMaterial Saving:Over 90%of the existing structure being reused.Year of completion:2024Information of Circular PracticeBuilding Owner:Analogue Holdings LimitedBuilding Name:ATAL TowerDescription of the Building:ATAL Engineering Groups 12-storey headquarters was constructed under the HKSAR Governments Revitalisation Scheme for Industrial Buildings.The facility includes office space,training centre,innovation corner,car park,and gym facilities.Circular Initiatives:3.1Circular Practice:Smart heart sustainability is a key design theme of the development.To extend the lifespans of mechanical,electrical,and plumbing(MEP)systems,a smart building platform monitors the energy consumption of various equipment,including chillers,water pumps,photovoltaic pavers,and lighting controls.The platform also presents three-dimensional Building Information Modelling(BIM)graphics on the system dashboard,providing a comprehensive view of the buildings operations.By leveraging artificial intelligence(AI)and systematically collected data over time,a unique database is created,enabling accurate prediction of future building operations and early fault detection.In addition to enhancing MEP equipment performance,the design prioritises the creation of a comfortable environment that accommodates diverse lifestyles and multiple lifetimes.The office space is enriched with indoor plants and greenery,allowing occupants to enjoy views of trees and open skies through large windows,effectively blurring the lines between indoor and outdoor spaces.This connection to nature cultivates a vibrant environment that promotes well-being and productivity.Moreover,the installation of DigiFusion Internet of Things(IoT)sensors throughout the building allows for real-time monitoring of the indoor environment across different sections.When integrated with the DigiFusion smart building platform,these sensors enable the system to adjust performance dynamically,ensuring optimal comfort and efficiency for all occupants.This adaptability is particularly important for accommodating the needs of a diverse workforce,whether they are engineering professionals,administrators,or technicians.By addressing the varying requirements of different lifetimes,the development not only enhances individual comfort but also fosters a sense of community and connection among its occupants.By focusing on these goals,the development aims to create a sustainable environment that not only meets the needs of current occupants but also considers future generations,promoting a harmonious relationship between the built environment and nature.Benefits to the Project:It promotes cost savings,operational flexibility,and sustainability while enhancing the developments long-term value and structural resilience.Benefits to the Industry:This approach supports broader sustainability goals while simultaneously enhancing economic performance,fostering innovation,and strengthening competitive market positioning.Benefits to the Environment:The practice contributes to environmental sustainability by reducing material waste,conserving natural resources,and promoting a healthier ecosystem.DigiFusion-Offering tailor-made Smart Building PlatformSmart,Adaptive,and Built to LastCASE STUDY(7)ATAL Tower276.CASE STUDIES OF HONG KONG CIRCULAR PRACTICEHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKCircular Initiatives:2.2,2.3,2.4,2.6,3.1,3.3Name of consultant/contractor/manufacturer:Renovation Consultant:Hassell,Oval Partnership Renovation Contractor:Artwright,Pretterior Office recycling contractor:Sustainable Office SolutionsCosts:Collaboration with Partner to treat pre-used furniture:HKD 1.3 million Material Saving:180,881 kg office furnitureCarbon footprint:603,186 kg COe Year of completion:2024Information of Circular PracticeBuilding Owner:Hang Lung PropertiesBuilding Names:Standard Chartered Bank Building,Gala PlaceDescription of the Buildings:Standard Chartered Bank Building:A prestigious Grade A building located in the heart of the financial district in Central and distinguished by its superb architectural design that melds the artistic with the practical located adjacent to the Central MTR Station and the interchange station of the Island Line and Airport Express railway.With such unrivalled accessibility plus a superb view of Victoria Harbour,the Standard Chartered Bank Building is an ideal office location.Gala Place:Located at the junction of Dundas Street and Nathan Road in Mongkok,Gala Place houses a diverse array of merchants and attracts high footfall.It showcases a curated portfolio of services and products,including chic fashion,outdoor gear,lifestyle items,beauticians,gym,figures and toys,watches,and a variety of enticing food and beverage offerings.Together,these retailers and service providers have made Gala Place a hotspot for Mongkoks trendy and fashionable consumers,providing a convenient,one-stop shopping experience.Circular Practice:The circular practice focuses on reducing material consumption,reusing existing resources,and recycling waste generated during large-scale office renovation projects.1.Use of innovative and sustainable design and materials such as:Upcycled carpet products Red-list free mineral wool and wood flooring Upcycled ceramic tiles for washroom wall finish Upcycled hundred-year-old tree trunk converted as reception counter for both Standard Chartered Bank Building and Gala Place Sustainable materials(bamboo)used for feature ceilings2.Reuse,Recycle and upcycle 4,439 items of office furniture in collaboration with partner Donate 467 items of office furniture to 33 non-profit organisations Give away 212 items of office furniture to 129 colleagues for free Together avoided 603,186 kg COe,which is equivalent to 3,603 flights from HK to Singapore Together avoided 180,881 kg of landfill,which is equivalent to 101 units of HK TaxiBenefits to the Project:The circular practice enhanced the projects sustainability profile by significantly reducing material consumption and waste generation through the strategic reuse and upcycling of resources.Benefits to the Industry:This practice establishes a precedent for implementing substantial circular economy principles in large-scale office renovations.Benefits to the Environment:The initiative diverts substantial waste from landfills and contributes to the conservation of natural resources.Redefining Luxury with Circular InteriorsCASE STUDY(8)Standard Chartered Bank Building,Gala Place286.CASE STUDIES OF HONG KONG CIRCULAR PRACTICEHONG KONG CIRCULAR BUILT ENVIRONMENT GUIDEBOOKCircular Practice:Material Take-Back:The project diverted over 50%of landfill-bound materials through reuse and recycling of more than 210 tonnes of granite and glass panels.Design for Reuse Over Multiple Lifetimes:Evergreen Bamboo Spirit on the third floor incorporates reclaimed glass panels with a bamboo motif,while the ground-level landscape uses upcycled granite to create a reflective mirror pool.More than 30-year-old glass&granite were reassembled as a new design feature,demonstrating thoughtful stewardship of resources.Inspiration and Implementation of Nature-Based Solutions:A green wall is suspended above a reflective mirror pool on the ground floor.Outdoor garden on the third floor utilises diverse plant species.Regenerative Urban Development:The project incorporates 4,500 sq.ft.of greenery,and utilises patented technology by combining aquatic microalgae reactors with natural processes to efficiently lower indoor CO levels,enhance air quality,and support sustainability.Responsible and Healthy Materials:The project utilises sustainable materials,including FSC-certified plywood,gypsum boards with recycled content,and zero carbon emission carpet ensuring both environmental responsibility and the well-being of colleagues.Benefits to the Project:The implementation of advanced technologies contributed to a reduction in the projects CO emissions.Achieving LEED and WELL Platinum certification demonstrates the projects adherence to international standards for environmental performance and occupant well-being,establishing it as a recognised benchmark in sustainable design.Through material innovation and upcycling initiatives,approximately 210 tonnes of demolition waste were diverted from landfills and repurposed into high-value architectural features.Benefits to the Industry:The project is the first financial institution partnering with City University of Hong Kong to develop an energised pedal.It provides an industry benchmark for the integration of innovative technologies and sustainable practices
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