Featured Region: London

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

London is well placed to enjoy a continued strengthening in construction over the next eighteen months. Nationally, we are forecasting an increase in the value of office and private housing building over the next two years. London is likely to enjoy a good share of this growth.

The housing market in London is much more buoyant than elsewhere in the country; indeed by most measures it is the only region that house prices have surpassed last year’s levels. In addition, office development is likely to be focussed in prime locations and so will not be spread evenly across the UK. There is however some concern regarding the office sector especially in the City, recent announcements by a number of large international banks suggests that demand for City property could be hit as banks attempt to cut costs by moving back office functions out of the Capital in an effort to reduce costs.

During the slump in private sector building, London benefitted from government funded construction in Olympic projects and infrastructure schemes. While the Olympic building is all complete, there will continue to be significant investment in the rail network in London and the South East of England.

We forecast that London will see an 3% decrease in the underlying value of project starts this year but strong growth will return in 2013 and continue in 2014.