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Impact of slowdown still to be felt in London

London was one of the few regions which managed to avoid the worst of the construction slowdown in 2008.

Analysis by Glenigan recorded the value of underlying work starting on site fell by just 4 per cent in 2008.

However, as the credit crunch continues to hit hard on London’s finance and business service industries, it is almost certain that private sector construction prospects will suffer. The value of underlying planning approvals in the region has also fallen sharply across the offices, retail and hotel and leisure sectors.   

Glenigan also predict that 2009 will see a sharp drop in the value of underlying work starting on site. This is based on a fall in the value of underlying planning approvals, combined with a growing number of projects being placed on hold.

Looking forward there are some positive projects which are expected to boost construction in the city. London is already benefiting from preparations for the 2012 Olympics. The £303 million Aquatics Centre began in July, and the Velopark, the latest high value stadia project, is due to start on site.

Private housing construction in the region has been hit hard by tighter mortgage conditions and sustained pessimism in the residential housing market. Information recorded by Glenigan shows that the value of underlying construction starts during the first four months of 2009 was 65 per cent down on a year earlier.

A prominent part of construction activity in the Capital is large projects. On the surface the pre-construction pipeline looks good but the current economic climate it is likely that a bigger proportion of planned large projects will be delayed of abandoned. Two big projects which should boost activity in the region include Crossrail (£16 billion) and Heathrow East (£350 million for phases 1 and 2).

As a whole Glenigan predict a 23 per cent decline in underlying construction starts in 2009 and it is hoped that a continuation of key large projects combined with the impact of London 2012 will soften the blow to some parts of London’s construction industry.

Client Focus: Network Rail

Major Project: £275m reconstruction of Blackfriars railway station and bridge as part of the £5.5 billion government funded Thameslink investment managed by network rail. The first step of Stage One, demolition, commenced October 2008. Stage Two, commences in 2009 with a completion date at the end of 2011, by which time Blackfriars will have been completely rebuilt.

Past Activity: In the past two years and including 2009 ytd Network Rail has been involved in 14 projects in London alone with a combined value of £2,913 million. Major projects for 2009 include £800m track enhancement works across Central London.

Latest News: Tenders have been returned for a £600m high output framework contract for a rail maintenance project. The scheme is expected to last 84 months and works include both the planning and delivery of plain line track renewals.

Contractors they have awarded work to: Bellwinch Homes, Geoffrey Osborne.

Contact: 020 3356 9595, www.networkrail.co.uk

Top Clients for London

Client NameContracts awarded in 2009 year to date
    
    No of ProjectsValue (£ million)  
Highways Agency    15,500  
London 2012    9976  
Network Rail    4831  
Stanhope Plc    2800  
Sellar Property Group    1400  
London & Continental Railways Ltd    1350  
Network Rail Infrastructure Ltd    5365  
HM Customs & Excise    1300  
London Borough of Hackney    4271  
Heathrow Airport    1260  

Top Contractors for London

Client NameContracts awarded in2009 year to date
    
    No of ProjectsValue(£ million)  
Connect Plus    15,500  
Carillion Plc    41,575  
Balfour Beatty Rail    21,075  
VolkerRail    1800  
Trackwork Ltd    1800  
Colas    1800  
Babcock Rail    1800  
Jarvis Plc    1800  
Mansell Plc    14474  
Interserve Project Services    4411  

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