This document summarizes a presentation about construction prospects in the UK for 2014 and 2015. It discusses the gradual economic recovery in the UK, with improved manufacturing and rising employment. Consumer confidence and housing market are also up. Private housing construction is expected to be a key driver of growth, supported by government initiatives. Office and retail construction are showing signs of recovery, while industrial and hotel/leisure sectors also have brighter prospects. Overall, the UK construction industry is expected to see moderate growth over the next two years led by the private sector.

1. How to win work
Construction Prospects for 2014 & 2015
Presented by: Allan Wilén, Economics Director
Date: 26th November 2013

2. About Glenigan
 The trusted provider of construction industry data, analysis,
forecasting, company and project intelligence
 Nearly 15,000 users of our information
 Established in 1973, now part of the Top Right Group
 Clients include companies involved in the design and realisation of
construction projects, suppliers of materials and services to the
construction industry and organisations monitoring construction
activity
2

3. UK Economy
 Economic recovery – at
last!







Deficit reduction limiting
growth
Improved manufacturing
sector export dependent
Access to capital finance
remains limited
Consumer expenditure &
retail sales growth
Rising employment
Housing market upturn
Fragile business confidence

4. Brighter Consumer Prospects?
■ Consumers hard hit since 2007
Real Earnings & Household Spending
6%
■ Households hit by:
Weak earnings growth
Tax rises
Higher inflation
Debt levels remain high
Uncertain employment
prospects
■ Restricted bank lending
■ Rising consumer confidence
5%
Real Average Earnings
Household Consumption
4%
3%
Change on previous year
■
■
■
■
■
2%
1%
0%
■ Lower inflation
■ Moving out of recession
-1%
-2%
Sources: ONS & Glenigan Analysis
-3%

5. Plethora of Housing Initiatives
FirstBuy
10,500 sales
Get Britain Building
16,000 units
unlocked
Funding for
Lending
NewBuy
Mortgage
Indemnity
Scheme 100,000
sales
Help to Buy support for new
& existing
house sales
Public land
release
150,000 plots

6. Private Housing
 Strong performance in
2012 & 2013
 Further growth ahead
– Government initiatives
lifting market
160,000
Unit Starts
Unit Completions
10,000
140,000
120,000
8,000
100,000
6,000
80,000
60,000
4,000
40,000
2,000
20,000
0
0
2008 2009 2010 2011 2012 2013e 2014f 2015f
Sources: DCLG, Glenigan
Thousands of Units
– Improved mortgage finance
availability
12,000
Projects Starts
Value of Project Starts £m
– Gradual rise in household
incomes and confidence
180,000

7. Private Non-Residential Activity
Private Non-Residential Project
Starts
Hotels & Leisure
14,000
Retail
Offices
12,000
Underlying value of starts - £million
 Hesitant recovery in
2013
 Firmer growth ahead
 Increased investment
in prime office space
 Industrial resurgence
 Retailing restructuring
 Hotel & leisure sector
prospects brighten
16,000
Industrial
10,000
8,000
6,000
4,000
2,000
0
2007
2008
2009
Source: Glenigan
2010
2011
2012 2013e 2014f 2015f

8. Brighter Prospects for the High Street?
 Retailers & retail construction
hard hit by recession
4
2
2006 2007
2008
Source: National statistics
2009
2010
2011
2012
Mar
Nov
Jul
Mar
Nov
Jul
Nov
Mar
Jul
Mar
Nov
Jul
Mar
Jul
Nov
Mar
0
Nov
 Recent strengthening in
retails sales
6
Jul
– Rise of the Internet
– Click & Collect
– Supermarkets move back to
the high street
8
Mar
 Structural Change Underway
10
Nov
Sluggish sales
Company failures
Rise in vacant floorspace
Limited access to capital
funding
Percent of total retail sales
–
–
–
–
Internet Sales
12
2013
8

9. Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Six month rolling totals
Retail Construction
100%
80%
-60%
Retail
Starts on Site
Detailed Planning Approvals
60%
40%
20%
0%
-20%
-40%
Source: Glenigan

10. Private Sector Recovery
Business Services & Finance
108
106
104
102
100
98
96
94
92
2013 Q1
2012 Q3
2012 Q1
2011 Q3
2011 Q1
2010 Q3
2010 Q1
2009 Q3
2009 Q1
2008 Q3
2008 Q1
2007 Q3
2007 Q1
2006 Q3
90
2006 Q1
 Financial & Insurance
sector still weak
 Firm growth in other
business services
 Higher private sector
employment
 Increased demand for
office accommodation
10

11. Office Construction
Central London Office Construction
Docklands
City
West End
Total availability
6,000
5
14
12
10
15
8
6
20
4
25
2
Source: Knight Frank
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
30
2001
0
2000
million sqft
10
Value of scheme starts of less than £100 million
16
Underlying project starts
0
Vacant Office Space (million sqft) - Reverse Scale
18
Office Construction
5,000
4,000
3,000
2,000
1,000
2007 2008 2009 2010 2011 2012 2013e 2014f 2015f
Source: Glenigan

12. Property Market & Construction Prospects
 Government looking to private sector to lead the
recovery
 Access to capital gradually improving
 Rising consumer confidence
 Private housing market engine for growth






Government initiatives build confidence
Increase in private housing starts
Strengthening Office Market
Retail property facing structural change
Industrial upturn
Refurbishment & retro-fit

13. Private sector drives recovery in 2014
Value of Underlying Project Starts by Sector
Change on previous year
2012
2013e
2014f
Private Housing
Social Housing
Industrial
Offices
Retail
Hotel & Leisure
Education
Health
Community & Amenity
Civil Engineering
Total
36%
9%
32%
39%
11%
-3%
-27%
6%
-27%
-6%
5%
3%
2%
-5%
11%
-7%
1%
9%
-5%
-6%
4%
2%
9%
-23%
12%
8%
24%
13%
5%
-12%
9%
9%
4%
Source: Glenigan.
N.B. Underlying project starts exclude individual projects of £100m or more
13

14. THANK YOU
CONTACT
Allan Wilén
Economics Director
Email: allan.wilen@glenigan.com
www.glenigan.com