Real Estate and Construction
Construction is dependent on the wider economic environment more so than many other sectors, with output demonstrating clear cyclicality in recent years. The sector’s gross value added (GVA) saw a sharp decline in the aftermath of the 2008 financial crisis, and a further fall in light of wider economic uncertainty in 2012. It has since witnessed a strong resurgence, hitting record highs in 2019.
It has the potential to be one of the most resilient sectors amidst the Covid-19 pandemic, with the outdoor nature of the work restricting the impact of the likes of social distancing and other health and safety measures. Nevertheless, that dependency on the wider economic environment will likely temper such effects, with the sectoral outlook being much more dependent on external demand conditions. Indeed, there looks set to be a clear divide in terms of areas of construction activity. For instance, while the shift towards remote working practices will likely diminish demand for construction of office spaces, the residential side of the sector may well see a simultaneous uptick.