As discussed in my recent article, prospects for the education sector appear bright, despite years of austerity measures. Following 2014, which saw growth of 15.4% after four years of contraction, output growth in the education sector will remain in positive territory for the rest of the decade, boosting the construction industry’s longer-term outlook in our latest summer forecast. In 2015, output in the education sector is forecast to rise 3.7% and a further 4.7% in 2016, led by increased workloads through the Priority School Building Programme (PSBP) and higher private investment in universities. As publicly-financed and privately-financed education construction work continue to expand over the forecast period, output in 2019 is projected to be 22.6% higher than in 2014.
The PSBP was introduced in 2011, but progress has been relatively slow so far due to delays in procurement. At the end of June 2015, only 25 schools were completed and 90 were under construction, out of a total of 260 schools listed under the first phase. In addition, now that the majority of the PF2 batches have secured private funding, school building will receive a further boost as construction begins under these schemes. Phase 2 of the PSBP has seen the government commit an additional £2.0 billion funding towards the rebuilding and refurbishing of 277 school buildings between 2015 and 2021.
The real driving force in the education sector will come from universities. Demand for student accommodation has been robust, driven by full-time students and increased appetite from overseas students. The government has also lifted the cap on student numbers, which will create an additional 60,000 places from this year. As a result, universities across the UK have heavily invested in infrastructure and facilities, including £1 billion worth of campus transformation at both the University of Manchester and the University of Cambridge. While this new wave of investment is set to meet growing demand for student accommodation, much of this funding is likely to be skewed towards high-end accommodation targeted at wealthy international students, charged on average £12,000 in fees per year. As international students continue to pay higher fees, this raises expectations for world-class learning facilities, which in turn will drive momentum for further investment.
By Amandeep Bahra at 4 Sep 2015, 09:52 AM