Featured Region: London

Underlying value of construction projects starting on site. (Excludes individual projects of more than £100 million and framework agreements).

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Construction in the Capital picked up slightly in 2010 as the value of underlying project starts rose by 8% on a poor 2009. After a promising start to the year, the second half stagnated, with starts down a percent versus the same period in 2009.

However, private sector construction prospects, which had suffered over the previous two years as the credit crunch battered financial and business services, staged a comeback in every sub-sector except for industrial. Firms increased capital investment in new premises as lending conditions improved. Hotel & leisure also posted an increase owing to the upcoming Olympics though declining detailed planning approvals at the end of the year signalled the weakness now being experienced in 2011 as many projects are presumably well under way.

With education and social housing builds losing a large chunk of their funding following October’s Spending Review, most of the Olympic work already underway and a slowdown in the housing market, the outlook for this year is not optimistic. However, there are bright spots: private housing is recovering, while infrastructure spending on railways looks set to remain significant. These areas of growth mean that over 2012 we expect the underlying value of project starts to match the high level seen over 2011.