London

London – Overview

Q4 2022 was a poor quarter for the underlying market with project-starts, main contract awards, and detailed planning approvals all having weakened. Major projects ensured growth in detailed planning approvals during the quarter.

Totalling £3.3bn, work starting on-site in London during Q4 2022 fell 38 per cent against the preceding quarter to stand 12 per cent down on a year ago. While underlying (less than £100m in value) work starting on-site performed well against the preceding quarter on a seasonally adjusted (SA) basis, rising 4 per cent, and the value fell 17 per cent compared with a year ago. While major (£100m or more) project-starts fell 62 per cent during the quarter, the value increased 1 per cent on the previous year to total £1.05bn.

At £3.54bn, main contract awards in London declined 23 per cent during Q4 2022 to stand a quarter lower than the previous year. Underlying contract awards largely exacerbated the fall, with the value declining by a third (SA) against the preceding quarter and 36 per cent against the previous year to total £1.79bn. Major project contract awards added up to £1.75bn, a 15 per cent decline compared with the preceding quarter and an 11 per cent fall against the previous year.

Detailed planning approvals in London climbed 6 per cent against the previous year to total £3.96 million. However, the value remained a fifth lower than a year ago. Major project approvals, at £1.94bn, increased 51 per cent against the preceding quarter but remained 21 per cent lower than a year ago. Underlying project approvals fell 35 per cent (SA) against the preceding quarter and 17 per cent against the previous year to total £2.02bn.

Sector Analysis – Project-Starts

Private housing accounted for 35 per cent of the value of work starting on-site in London during Q4 2022, with the value of work adding up to £1.17bn. Despite being the most active sector, private housing-starts fell 31 per cent compared with the previous year. Work commencing on-site included a £100m, 487-flat development in Wembley (Project ID: 21321914). Social housing project-starts, adding up to £415m, also fell (-37 per cent) against the previous year.

In contrast, office work starting on-site increased 18 per cent against the previous year to total £671m. The sector accounted for a fifth of the total value of work starting on-site, being boosted by a £69m new office development on Park Street (Project ID: 19062613). Community & amenity was another active sector (accounting for 11 per cent) that experienced growth against the previous year, with the value rising 483 per cent to total £370m. Growth for the sector was almost entirely due to a £350m court and police headquarters development on Fleet Street, City of London (Project ID: 17375364). Hotel & leisure project-starts also advanced strongly (+23 per cent) against the previous year to total £341m, a 10 per cent share of the total value.

Value of Project-Starts in London during Q4 2022 by Sector

Sector Analysis – Detailed Planning Approvals

Private housing was also the most active sector for detailed planning approvals, accounting for 52 per cent of the total value. This was despite the value falling by almost a fifth (-19 per cent) against the previous year. Private housing consents totalled £2.06bn and included the £400m Belgravia Housing Estate redevelopment (Project ID: 19110437). The Capital’s other usually active sector, offices, also experienced a fall (-39 per cent) compared with the previous year to total £488m.

Meanwhile, social housing detailed planning approvals increased 30 per cent compared with a year ago to total £675m. The sector replaced offices as the second-most active sector, being boosted by two £130m schemes: the 340-flat Ledbury Estate development (Project ID: 18383719) and the 294-unit Broadwater Farm redevelopment (Project ID: 22093231). Like project-starts, hotel & leisure experienced a strong period for detailed planning approvals with the value advancing 54 per cent against the previous year to total £426 million. Hotel & leisure approvals included the £100m expansion of Crystal Palace FC’s Selhurst Park expansion (Project ID: 17438932).

Value of Project Approvals in London during Q4 2022 by Sector

Forecast Construction-Starts for London

Note: Underlying projects are schemes with a construction value of £250,000 to £100 million.  Forecast updated in October 2022 p – provisional, f – forecast.
Source: Glenigan