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London boom boosts commercial and retail project starts

Project starts in the office and retail sectors have grown by 25 per cent over the past year, driven by the strength of the London commercial market.

Schemes such as the £95m One Mitre Square development, which broke ground in August, have helped the commercial and retail sectors to record year-on-year growth, according to data from Glenigan.

The Glenigan Index of project starts was 4 per cent higher than a year ago, marking 17 months of consecutive growth. This was up from September’s figure of 3 per cent.

Allan Wilén, economics director at Glenigan, said: “Commercial and civil engineering work are taking over from housing as the lead drivers of new construction starts.

“This broad footing of construction growth bodes well for the upcoming period of political uncertainty ahead of the general election, and as expectations of an interest rate rise appear to be dampening confidence among UK homeowners.”

Private housing starts are now up 15 per cent in the year so far, but in contrast, social housing has struggled - starts are flat over the same period.

Disparity between the two housing sectors can also be seen within the planning pipeline. During the three months to September, the underlying value of private housing approvals was up by 24 per cent, while social approvals were down 24 per cent.

Looking at the regional picture over the past month, October has seen Scotland return to growth after four months of declining project starts. The northern English regions, Northern Ireland and Wales have shown the fastest growth, all seeing double digit percentage growth in project starts over the last three months.

By contrast, the East and South-west of England saw starts decline compared to a year ago, while the South-east has kept pace with the UK average of 4 per cent growth.

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