The number of mothballed schemes is again on the rise, as cuts to public projects continue to prevent recovery in the construction industry
According to industry tracker Glenigan, a further 103 projects, each with a value of more than £100 million, were put on hold during the last three months. August’s total now stands at 245, up from a record low of 142 stalled projects in June.
Cutbacks to education and social housing projects have also scuppered construction starts in the three months to August, according to Allan Wilen, economics director at Glenigan.
Wilen said: ‘Growth in private housing starts has stalled and positive growth from other parts of the private sector has been insufficient to make up for the lack of publicly funded starts.’
Social housing projects starting on site were down 30 per cent compared to the same quarter in 2009. Non-residential construction project starts were nine per cent down on last year.
Peter Farmer, a director at 3DReid said: ‘The progress of many projects, although there are notable exceptions, has been slower as many clients are reluctant to commit to subsequent project phases due to a lack of financial liquidity and the reticence of banks to continue lending.’
Chris Brown of developer Igloo added: ‘The banks have started to lend on good quality speculative residential development and on commercial development pre-let to good covenants on long leases.
‘This lending is at low loan to values, typically 50 pr cent. Apartments and speculative commercial space in major cities, other than London, are not attracting debt finance.
‘Development continues to be entirely dependent on the relatively few developers - mainly quoted or backed by institutional Investors - with access to equity.’