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London project prices on up

Research from Davis Langdon shows materials up by 8% in last 12 months

Building projects prices are still soaring in London said new research by project and cost management consultancy Davis Langdon.

According to the report, this is particularly evident on large and complex projects in Central London, which have attracted a premium of up to 4% above underlying inflation over the last year.

According to the research, high demand on materials from the Far and Middle East is leading to shortages and raising the costs. Simon Rawlinson, company spokesman, said: “: “In general, construction materials increased by an average of 8% in the past 12 months. This is the current driver. But, labour – the big cost driver and the biggest source of risk – and professional and resources management are also responsible.”

In Greater London, building prices rose by 15% in the last quarter with a similar forecast to continue for the next two years. The volume of new-built output rose by 18% in cash terms last year to a value exceeding £10 billion pounds for the first time.

Mr Rawlinson said: “Experience from previous cycles, shows that demand can often fall very dramatically, and instead of stability, the result is dramatically falling prices, below-cost bidding, and projects under financial pressure and so on.”