Housebuilding is propping up construction in London as major regeneration and infrastructure hotspots appear in other areas of Britain.

A report out today by Barbour ABI and the Construction Products Association details the levels of construction contract values awarded to different areas in 2016. London saw a decrease of 15% compared to 2015, down to £13.1bn on the year.

Only two London regions made it into the top ten for overall construction value in 2016 – Tower Hamlets and Camden & City of London, fourth and eighth respectively.

However, housebuilding remains strong in the Capital. In contrast to other regions that experienced a fall in contract value, London’s annual total held steady at £5.5bn in 2016, aided by developments such as Greenwich Council’s £262m Woolwich Estates regeneration and the Atlas Building in Hackney.

Economists added that a particularly strong 2015 means London’s fortunes have dropped back to normal levels.

Michael Dall, lead economist at Barbour ABI, said: “After a fruitful year for construction in 2015, especially in the capital, it was always going to be challenging replicating similar figures, particularly with the uncertainty of Brexit falling in the midst of 2016.

“However, housebuilding once again proved to hold strong and ‘prop up’ construction with a number of major developments commissioned across the city, as investors and housebuilders continue to see the value in developing residential property in London.”

Birmingham was the only UK region that experienced a combined ‘hotspot’ for commercial, residential and infrastructure construction contract values last year when compared to 2015. This was primarily driven by the award of contracts for the regeneration of the city centre, including 1,500 flats at the Connaught Square and Exchange Square redevelopments.

The majority of the ‘coldspots’ for construction are clustered in the residential sector and replicated across the country, falling below long-term averages, said the report.

In the South East, Yorkshire & Humber and the East Midlands, one-third of sub-regions were residential coldspots. Of the 42 coldspots across Britain, the South East led all regions with seven of the total, all for residential. London was the sole region where there were no residential coldspots.

Rebecca Larkin, senior economist at the Construction Products Association, said: “Coldspots permeated through the residential sector last year, in a marked contrast to its strength in the previous regional report.

“The sector has ramped up housebuilding activity over the last 12 months, reflecting the flow of work generated by the peak in contract awards in 2015, but there are now question marks as to what impact the fall in contract values will have on construction over the next 12 months.”

Source: Aldermore.

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