Investment in housebuilding shifts from London

Contract awards on major regeneration and infrastructure projects have seen ‘hotspot’ pockets of construction emerge across Britain as investment in housebuilding, infrastructure and commercial shifts away from London and the South East.

The ‘Regional Construction Hotspots in Great Britain 2017’ report from industry analysts Barbour ABI and the Construction Products Association highlights the levels of construction contract values awarded in 2016 across all regions of Great Britain. London saw a decrease of 15% compared to 2015, down to £13.1 billion on the year.

Looking at the London districts from a national perspective, only two London regions made it into the top ten for overall construction value in 2016 – Tower Hamlets and Camden & City of London, fourth and eighth respectively, boosted by projects such as the £300 million Chrisp Street development in Poplar and the £500 million 22-24 Bishopsgate tower in the City (formerly the Pinnacle).

For residential construction, in contrast to other regions in Britain that experienced a fall in contract value in 2016, London’s annual total held steady at £5.5 billion, with developments such as Greenwich Council’s £262 million Woolwich Estates regeneration and the Atlas Building in Hackney with a contract value of £170 million.

In past years, London frequently dominated the ‘hotspot’ pockets of construction activity, however the report for 2016 indicates a spread right across Britain, with London only holding six of the 61 hotspots.

However, London was the sole region where there were no residential cold spots, with contract awards for large developments keeping values relatively unchanged from 2014 and 2015.

Michael Dall, Lead Economist at Barbour ABI, said, “After a fruitful year for construction in 2015, especially in the capital, it was always going to be challenging replicating similar figures, particularly with the uncertainty of Brexit falling in the midst of 2016. However, housebuilding once again proved to hold strong and ‘prop up’ construction with a number of major developments commissioned across the city, as investors and housebuilders continue to see the value in developing residential property in London.”

Rebecca Larkin, Senior Economist at the Construction Products Association said, “With residential and commercial contracts having remained at high values, the sharp decrease in infrastructure contract awards in London during 2016 was disappointing. It is, however, softened by the fact that values simply dropped back to relatively normal levels after an impressive 2015. That means construction output over the next few years will be buoyed by work on previous hotspots – the Thames Tideway Tunnel and the Gospel Oak-Barking Overground extension for example – with new projects awarded contracts in 2016 adding to the pipeline of activity.”

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