The outlook is becoming increasingly gloomy as the worsening economy hits the capital
London escaped the worst of the construction slowdown for much of 2008. Indeed, the value of underlying work starting on site fell by just 3 per cent in 2008.
But construction starts in London fell sharply in the fourth quarter of 2008 as the worsening economic conditions took hold.
The value of underlying construction starts has continued to slide during the opening months of 2009, with starts during the three months to February 35 per cent down on a year earlier.
With financial and property related firms reducing their workforces, many developers have put planned office construction projects on hold.
The value of underlying office starts, which accounted for about a quarter of the value of underlying construction starts during 2007, fell 21 per cent last year. That said, some developers are still pressing forward with major office projects. Tighter mortgage conditions and sustained pessimism in the residential housing market are now severely impacting private housing construction in London.
Having held up well during the first half of 2008, sector starts in the capital are now following a similar trend to the rest of the country. The value of underlying construction starts was £150 million in the fourth quarter 2008, down 73 per cent on a year earlier.
Construction prospects in London are becoming increasingly gloomy. The value of projects in the pre-construction pipeline has fallen away sharply, with underlying planning approvals falling by 36 per cent in value during the fourth quarter of 2008.
Large projects are a significant feature of construction activity in London. At first glance the preconstruction pipeline for large projects looks promising. However, given the current economic climate, there is likely to be a higher than normal proportion of planned large projects to be either delayed or abandoned.
Overall, Glenigan expects underlying construction starts to significantly deteriorate in 2009.