Preliminary estimates of GDP suggest that nationally the construction sector had a somewhat lacklustre second quarter, with output reducing by 0.5% compared with Q1. However, tendering activity remains buoyant in the Central London commercial and residential sectors and cranes once again dominate the London skyline.
Buoyant market conditions offer contractors greater scope to be selective in the opportunities sought. Consequently, risks which may have been deemed acceptable two years ago now command a premium, a driver behind recent tender price inflation. Incorporate a recovery in margins and a slight acceleration in input cost inflation and we anticipate that tender prices will rise significantly over the next five years.
If you would like to receive a copy of the Core Five Central London Update, including our forecast for tender price inflation through to 2018, please email Kelly Forrest, our chief Construction Economist.
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