FMJ Facilities Management magazine providing industry-specific intelligence to FM and property professionals
Skills shortages continue to be a significant challenge for the European construction industry, despite growth prospects in data centres, life sciences and high-tech projects.
This is according to a new ‘Construction Market Insights‘ report for Europe by global construction consultant Linesight, which shows that widespread labour shortages have emerged within the construction and engineering industries in Europe.
The report on key trends across the industry in Europe including the UK, along with detailed analysis of labour dynamics and commodity price changes for the coming quarters, shows that the construction industry shortage of skilled workers is more prevalent than in other industries.
Significant gaps can be seen with trades such as bricklayers, carpenters and joiners. Plumbers, pipefitters and building electricians also rank within the top 10 labour scarcities.
These shortages, particularly the lack of mechanical, electrical and plumbing trades, could limit progress in high-tech and ‘mission-critical’ sectors where construction demand is high, and there is a limited pool of these particular skillsets.
Looking to the wider industry trends, the report predicts that construction inflation in Europe will decelerate in 2024, due to falling energy and commodity prices as well as easing inflationary pressures.
Linesight also found the net zero and innovation agendas to be key drivers for construction industry growth, especially for the troubled commercial sector, with demand for facilities that use less energy or which support innovation aimed at reducing resource consumption.
Prices for construction commodities continue to stabilise with prices for copper and steel trending downwards, while the cost of cement and diesel showing signs of increasing.
In general, the supply chain is still being significantly impacted by regional conflicts, persisting effects of the pandemic, and climate change. Supply chain relationships will be critical in 2024 to mitigate lead time challenges for equipment procurement and delivery dates, with any decreases in material pricing offset by rising labour costs.
Sector-specific trends
In the commercial real estate sector, improving macroeconomic conditions and falling interest rates are likely to see recovery in construction output in the coming years. Deep retrofits of prime assets in sought-after locations will be a priority, while flexibility and employee wellbeing will be important considerations in office design in 2024. In terms of project volume by value for the upcoming projects, the UK leads the charge, followed by Germany.
Data centre growth is likely to remain strong due to the increasing demand for cloud services and data-intensive applications. However, despite the introduction of policies across Europe to support the upgrade of power networks, limits on energy consumption continue to impact on data centre design and construction. Linesight’s analysis shows that Nordic countries are emerging as preferred data centre investment locations due to the availability of renewable energy resources.
Life sciences are also expected to grow considerably in 2024, with several European countries experiencing double-digit growth in R&D spending and AI poised to accelerate drug discovery and the requirement of manufacturing facilities. Life sciences clusters in the UK have gained significant attention, with London continuing to attract investors, developers and end-user alike. The UK’s Golden Triangle remains a focus of European life sciences, with government funding packages continuing to drive investment.
As part of moves to greener energy sources high-tech manufacturing is seeing significant spike on the back of growing demand for semiconductor production. While Europe only accounts for eight per cent of global semiconductor wafer production capacity at the moment, there are currently 200-250 new battery plants planned across Europe to be delivered in the next decade. The complexity of high-tech manufacturing supply chains and the availability of skilled workers may have an impact on the timelines of these projects.
Michael Riordan, Managing Director of Linesight UK said: “Amid cautious recovery, the UK construction industry can look forward to the possibility of a rebound in the latter half of 2024. While the governments’ commitment to net-zero initiatives is helping to fuel this transformation, challenges persist in the form of skilled labour shortages and ongoing supply chain challenges. On a positive note inflation and material commodity prices have seen welcome decreases.”
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