Market insights – around the globe

Our team of economists have worked closely with our local experts to analyse an expansive cost dataset to provide insight into how the construction industry is performing. Use the filter below to access the full data breakdown for the individual market of your choice.

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UK - London

1 Economic outlook

Infrastructure growth should soften the effects of easing commercial activity

London continues to drive the UK economy. But after hitting a high in late 2014, the nation’s economic growth has slowed and is set to slow further, with Brexit uncertainty casting a shadow. Expanding global growth will however provide support.

2 Markets and trends

Construction surged in late 2016 and early 2017, but output declined in each of the final three quarters of the year and forecasts point to pallid growth in 2018.

London is seeing the effects of slowing economic growth, although infrastructure remains a bright spot buoyed by significant investment in HS2, which is compensating the ramping down and fall of investment on legacy schemes.

Commercial workloads have softened. However, housing shortages and strong activity in the private-rented sector should cushion potential falls in residential construction. Greater educational spending, to retain and develop talent, also looks to offset slowing workloads.

The appetite for new construction may be tempered, but pressure remains. Skills shortages are a major concern, as an ageing workforce hits retirement. The concerns are compounded by uncertainty over the flow of migrant labour which is currently critical to London construction.

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Key Facts
Tendering: Lukewarm
Market: Staying the same
Cost escalation 2017–18: 3.9%
Cost escalation 2018–19: 2.8%
Contractor’s margin: 5.8%
Preliminaries: 13.2%
Location factor (USD): 100.0
PPP coefficient: 1.0

 

3 Future outlook

London’s strengths remain as a leading global city and destination for both national and foreign direct investment. Pricing pressures may ease with reduced demand, but persistent capacity constraints, coupled with improving global growth impacting on material costs, will see price inflation remain positive.

 

 


This content is part of the International construction market survey 2018

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