The number of luxury homes being planned or under construction in London has hit a record high, according to a report by EC Harris, but pressures continue to mount on construction firms to deliver projects on time.
Research from the group’s 2014 prime residential report shows a 25 per cent increase on last year in planned activity over the next decade, with 25,000 units to be delivered in the capital worth a combined £60bn.
The report, London Prime Residential Development Pipeline: The race to secure capacity shows a predicted timeline for prime residential delivery, with 12,000 units in the pipeline between 2014 and 2017.
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Source: EC Harris
Around half the pipeline is located in either South Bank or the wider Chelsea and Fulham area, which EC Harris flags as reflecting an ongoing increase in large regeneration schemes across London.
But the consultant warned that developers and investors were “struggling” to keep pace with increasing buyer demand, up to half of the new homes planned in the next five years could end up falling behind schedule.
It added that this was due to a lack of available contractors to deliver the required quality of work.
Prime residential timeline
- 12,000 homes: 2014-17
- 10,000 homes: 2018-20
- 5,000 homes: 2021-23
EC Harris head of residential Mark Farmer said that with the UK economy back on track it was no surprise demand for luxury housing was boosting development.
“Where we are starting to observe real problems, though, is in the construction process,” he said.
“There is simply not the capacity out there to meet demand and many projects will undoubtedly fall by the wayside or experience delivery difficulties due to sheer lack of resources.”
Mr Farmer added that developers and investors were “looking to jump the queue” and pay premiums for construction to meet the deadline agreed with their purchaser.
The report highlighted the knock-on effect this rush to market has had on price inflation in the construction sector, with developers looking to get building work under way with “the best available tradesmen and project delivery expertise”.