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London construction down by a quarter

Value of new construction orders in London has dropped by 25 per cent in just two years - but architects aren’t yet feeling the pinch

According to a new paper compiled by the London Assembly Economy Committee, ‘low confidence and falling public investment’ are limiting construction output.

Despite the number of long-term public projects under construction, including Crossrail and the Thames Tunnel, many commercial schemes have stalled with investors not willing to ‘press the button’ on taking developments forward. Small and medium-sized contractors have been hardest hit by the drop in construction output.

Despite these figures, London architecture firms remain positive.

Simon Allford, director at AHMM said: ‘As a practice we have as of yet seen nothing of this declining workload.

‘In London we are building more than ever before and continue to progress to site with a wide range of projects involving large scale masterplans and buildings most of which contain some version of a healthy urban mix of commercial, residential, retail and educational uses.

‘A number of these are sites created in response to or in liaison with large scale sites ‘created’ by infrastructure projects. We are also getting increasingly involved in interesting civic commissions for multi-use healthcare facilities and libraries’.

Brian Waters, principal at BWCP, agreed that London is still building: ‘Which London do they mean? Tower cranes all over the city and along the river; basements and scaffolding all over Kensington; big works around the Olympic park and Crossrail digging up most of the rest.’

More than 210,000 new homes currently have planning permission in London but, the paper concluded, many of these developments have faltered.

Paul Nicholls, group business development director at United House told the London Assembly: ‘45 per cent [of the sites with planning permission] are not owned by developers. So nearly half are owned by investors, foreign interests, the public sector, and they sit around for a long time because their motivations are different to either developers or house-builders or perhaps local government.’

The research sets out a number of areas where experts say the Mayor, construction firms and other partners could take action to boost the sector and increase opportunities for Londoners, including removing barriers to encourage large-scale building of new homes, pushing forward on retrofitting existing housing, and increasing the number and quality of apprenticeships available to the sector. 

Stephen Knight, chair of the economy committee, said: ‘The construction industry is a vital part of the London economy and it is clear that public sector investment to boost house building and retrofitting could have a significant impact on boosting jobs and growth. Our summary paper provides a snapshot of the state of London’s construction industry at this time and we will continue to monitor the impact of any Mayoral programmes to support it.’

Nicola Thompson of CITB-Construction Skills added: ‘I think it is a combination of poor consumer confidence and lack of investment in projects coming forward, particularly from the public sector, that has really caused some of the pain in the last five years and also is going to compromise growth going forward.’

Nationally, the construction industry has contracted by 7 per cent in the past year and by 19 per cent over five years. 

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