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Whilst there is still a high degree of uncertainty over the dynamics in the construction and real estate sector, transactions are beginning to increase, despite the availability of limited finance. Uncertainty as to whether there will be a second dip in the economy has created an ultra-cautious business environment with pressure on margins and yields.
The built environment includes real estate participants including: owners, occupiers, investors, fund and property managers, developers and lenders, as well banks, insurance companies and pension funds. In the construction sector, the role of facilities management companies has been increasingly important on public private finance projects in addition to traditional construction and consulting professionals.
This sector has perhaps been impacted more than most by administrations particular in the SME and mid-market players and it’s fair to say that the environment will continue to be highly competitive in the near future. This will be particularly true as contracts come to an end and opportunities open up to negotiate tougher terms.
Further challenged by cuts in the public sector, with the slack not being taken up as yet by the private sector, those businesses with scale or specialist expertise have sought to increase their focus on international markets particularly in the BRIC economies. In addition, businesses are looking more to innovation to seek competitive advantage, as such the market has seen a degree of consolidation with strategic acquisitions in response to emerging opportunities in, for example, the nuclear and renewable technologies sectors.