A stark contrast will emerge across the construction industry over the next two years, with public sector construction continuing to grow while the commercial sector faces a rapid decline, according to the latest National Construction Forecast report from Experian, the global information services company.

"Private housing, industrial and commercial work looks set to shrink whilst growth is predicted for public housing, public non-residential and infrastructure projects," commented James Hastings, Experian's Head of Construction Futures.

Over the next two years the commercial sector will face the greatest falls, largely because a considerable portion of the decline in housing activity has already occurred.

James Hastings explained: "Growth of the sector remained positive in 2008, but the weakening economic conditions are likely to be felt very strongly this year and in 2010. All the evidence suggests that demand for new office, retail and leisure space has evaporated.

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"In addition, there are indications that space currently under construction has a low level of pre-letting in regional markets, which is causing to oversupply problems when projects are completed. However, despite the sharp falls predicted for the sector, output will remain above its 2005 level in all three years of the forecast period."

A very different situation is expected for the infrastructure sector, as a number of major public sector projects arrive on site. Mega projects, with total output in excess of £1bn, include Thameslink, with major works starting on Farringdon and Blackfriars stations this year, Crossrail is due to start in 2010, and the Forth Replacement Crossing in 2011. These projects, in addition to smaller ones (redevelopment of Reading station and port expansions planned for Shell Haven, Harwich, Felixstowe and Teesport) should push output in the sector up to a new record in 2011.

The Building Schools for the Future (BSF) programme has gathered momentum over the past year, and, with public sector funding safe up to waves 3 and 4, this will be an important driver of growth in the public non-residential sector. Work on the Olympic venues has already started, and will continue throughout the forecast period - the estimated total cost of the Olympic park is £3.3bn.

(JM/BMcC)