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Office schemes slowdown as planning applications drop

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The number of planning applications granted for commercial developments in England has dropped by 10 per cent in a year, according to the latest government figures

Figures from the Ministry of Housing, Communities and Local Government, released yesterday (June 27), reveal that district planning authorities granted 2,000 applications for commercial developments between January and March – a 11 per cent decrease on the same quarter last year.

In the year to March, 8,900 applications for office projects were granted, a fall of 10 per cent compared to the previous 12 months.

There was also a 6 per cent fall in the number of residential developments granted in the first quarter of 2019 compared to the same quarter last year.

Across all sectors, authorities received 111,300 applications for planning permission, down 5 per cent on the same quarter in 2018. Of these, 81,500 were approved – a 7 per cent fall.

Separate figures from industry tracker Glenigan show a weakening in construction starts on site this year. During the three months to May, the average value of projects starting on site dropped 2 per cent year on year to an average of £5.76 million per month.

In the company’s latest construction review, Allan Wilén, Glenigan economics director, attributes this fall to a 49 per cent drop on the previous three months – and a 21 per cent drop year on year – in the value of major projects (those worth £100 million and above) starting on site. By comparison, the value of underlying projects (of less than £100 million) rose 8 per cent year on year.

‘Despite the current improvement in underlying project starts, Glenigan project data points to a weakening in overall construction output nationally this year,’ he writes in the report.

‘The earlier progressive fall in the value of underlying project starts during 2017 and 2018 is expected to dampen output during 2019.’

Meanwhile, figures from the Chartered Institute of Procurement and Supply indicated that construction output had fallen by its sharpest amount in a decade last month.

The UK Construction Purchasing Managers’ Index – put together by the procurement body with research firm Markit – read 43.1 in June, its lowest reading since April 2009.

Civil engineering and non-housing building work suffered their greatest falls since October and December 2009 respectively, with housing work dropping by its biggest amount in three years.

CIPS group director Duncan Brock said: ‘Purchasing activity and new orders dropped like a stone in June as the UK construction sector experienced its worst month for a decade.

‘This abrupt change in the sector’s ability to ride the highs and lows of political uncertainty shows the impact has finally taken its toll as new orders dried up and larger contracts were delayed again. The pain of Brexit indecision was felt across all three sub-sectors but the previously resilient housing sector suffered the fastest drop in three years, which is frankly worrying news.’

Blane Perrotton, managing director of property consultant Naismiths, said the CIPS figures showed ‘less of a slide than a sledgehammer’.

He added: ‘After licking its wounds from a lean May, the construction industry has once again been ambushed by plummeting investor demand.

‘In an industry that still bears the scars of the crash a decade ago, the news that output is once again falling as fast as it did in the dark days of 2009 will send a chill down many builders’ spines.’

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