Mace forecasts rising tender prices in 2022 as Ukraine invasion impacts industry
Mace, the international consultancy and construction company, has today published its Market View report for Q1 2022. With the majority of data for 2021 now available, Mace’s analysis has concluded that tender prices rose 7.5% in 2021 and they are likely to hit 5.5% in 2022.
While construction output finished 2021 with robust growth in November and December, the Market View flags that higher energy and material costs, coupled with rising interest rates, could adversely impact output in 2022.
The report shows that gas prices rose substantially in the second half of last year and Russia’s invasion of Ukraine temporarily pushed Brent Crude oil prices above US$120 per barrel.
The report warns that higher energy costs have the potential to impose higher prices on energy intensive products such as bricks, plasterboard and glass, putting supply chains under pressure.
Overall, the analysis forecasts that Russia’s invasion of Ukraine will contribute to pushing tender prices up in 2022, adding to the list of geopolitical events impacting the construction outlook, such as the Chinese developer Evergrande defaulting on its debt in December.
Mace’s analysis is based on Government published statistics and information from the organisation’s construction supply chain. The figures are an average and the costs for different projects will inflate at different rates.
Matt Fitzgerald, Commercial Director at Mace Cost Consultancy, said:
“Construction orders look strong as we go through the first quarter of 2022 however this growth is likely to be tempered by geopolitical factors driving rising oil and gas prices. This, combined with inflation, interest rate and taxation rises will put pressure of the cost of living, the cost of borrowing and construction costs which in turn may translate into a slowing of growth in the economy over the medium term.”