The latest Construction Market Insights Report from global consultant Linesight says that growth in infrastructure, industrial, energy and data centre sectors is helping to sustain momentum in the industry.
However, the report warns that supply chains will need expert management in 2025 as supplier capacity pressures could result in longer lead times for essential equipment required to cool and operate data centre facilities.
In the UK, data centre investment is surging because of rising global demand for processing capacity driven by AI and the government’s recent announcement of its intention to designate data centres as critical national infrastructure in September.
According to Linesight, maintaining strong, collaborative partnerships with suppliers will help secure a reliable supply chain, mitigate risks of disruption and enable consistent lead times. Enhancing demand forecasts for supply chains can also mitigate the risk of capacity shortages and ensure timely access to the production line.
Michael Riordan, Linesight’s UK managing director, said: “AI and densification of data centres is keeping the sector on a high-growth trajectory, and spurring investment in the UK. It brings with it an increased need for power and cooling solutions. Improving grid connectivity to attract private investment and to maintain construction output is becoming more urgent.
“Cooling solutions are rapidly emerging as a critical trend to monitor, with supplier capacity and lead times starting to be impacted. We will be working closely with clients to deepen the supply chain relationships needed to accelerate delivery of the infrastructure necessary to meet the UK’s climate and growth ambitions in the coming years.”
Despite pressures, the report, which draws on Linesight’s own market intelligence as well as internationally recognised sources of data, predicts that most countries in Europe are expected to see growth in construction output in 2025.
The exceptions are the UK and Denmark, which are expected to see a marginal decline, and Italy with a more pronounced contraction of over 8%. According to Linesight, this can be attributed to subdued business and consumer confidence, elevated interest rates and rising labour costs.
The residential sector remains a weak point across Europe, with high interest rates and quantitative tightening constraining new investment, while growth in infrastructure, industrial, energy, and data centre sectors is helping to sustain construction output.
The report’s analysis of trends in commodity prices, availability and supply chain strength, highlights that metals are seeing the greatest volatility. The price of copper hit an all-time high on the London metal Exchange in Q2 and is projected to rise by between 0.5% and 2.2% in Q4 2024.
Steel rebar prices are expected to continue their downward trend, as a year-on-year decline of 6% is forecast for the UK. This is due to falling scrap steel and iron ore prices, weak demand and rising production in Europe. Also, China’s announcement in July of a new rebar standard for H2 2024 led to a sell-off of existing stocks at reduced prices, further pressuring global rebar prices.
Lumber prices may increase in the UK in early 2025, as the government’s new housing targets are likely to see an increased drive for housebuilding. This may also lead to a similar increase in the price of plasterboard, which recorded an 8% rise in the UK over 2024.
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