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12th April 2016
Near term the flow of new projects starting on site is also expected to be relatively weak. However, the medium term outlook for the London construction market is positive. A strong regional economy and the commencement of the Thames Tideway tunnel will support rising industry workloads in 2017 and 2018.
Commercial and private housing have been the main drivers for industry growth in London in recent years. However, 2015 saw a dip in private housing starts, while the pace of growth in office project starts moderated. Combined with a weakening in other sectors, starts in the capital during 2015 were down 8% year-on-year.
The medium term prospects for the region, however, remain positive. The capital’s improving economic fortunes, combined with a continued flow of overseas and domestic investment into new developments will keep workloads strong. Underlying project starts are forecast to strengthen next year, rising by 17%, supported by renewed growth in the residential and commercial property sectors as well as an increase in civils work.
In addition a number of major £100m+ schemes, which are excluded from this forecast, are set to buoy overall workloads. Demand and forecast development are particularly strong in the office sector, however major investments are also being planned by London’s universities as they capitalise on growing numbers of students. The positive consumer backdrop means a pipeline of major retail developments are also due to begin construction during the coming years.
Furthermore, the Thames Tideway Tunnel will also provide a long term lift to volumes further ahead. The main contracts have now been awarded, with work due to start on various parts of the scheme this year.
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