London Construction Grows at Fastest Pace Since 1994

Construction growth in London and the southeast of England reached the fastest pace in at least 12 years during the first quarter, leading a pickup in the U.K. building industry, a survey showed, reported The Bloomberg.

The number of London land surveyors reporting construction workloads rose outnumbered those showing declines by 36 percentage points, the most since the survey began in 1994, the Royal Institution of Chartered Surveyors said today. In the U.K., the net balance was 28 percentage points, the highest since the second quarter of 2004.

Britain's building industry, which accounts for 6 percent of the economy, expanded the most in three quarters in the final three months of 2006. A shortage of places to live and work and preparations for the 2012 Olympics in London are spurring a rash of construction, including the city's first 1,000-foot skyscraper.

``Private commercial building in London is at an all-time high, that's what's driven workloads up,'' said David Stubbs, a senior economist at RICS. ``In the U.K., we had a decent pickup in 2006 and it's going to be an even better 2007, driven by commercial property and the housing market remaining strong.''

An index from a survey of U.K. construction purchasing managers rose in March to 58.9, the highest since December 2003, from 57.3 the previous month, the Chartered Institute of Purchasing and Supply said today. The gauge has now exceeded 50, which shows expansion, for more than five years.

London's financial district is attracting investors in commercial buildings because a shortage of space is pushing up rents as firms add staff.

Workloads on private commercial construction in London more than doubled in the first quarter, RICS said. In the U.K. as a whole, 43 percent more surveyors reported workloads rising rather than falling, the most since 1997. RICS based its report today on responses from 168 surveyors.

U.K. offices returned 1.0 percent in February, and 22.8 percent in the 12 months to Feb. 28, according to figures from Investment Property Databank Ltd. released March 14. That's outstripping the 16.9 percent annual gain of all commercial real estate in the same period, IPD said.

London mayor Ken Livingstone is encouraging more skyscrapers in the city, where the highest building is the 800-foot-tall Canary Wharf Tower, to make better use of limited space. The biggest yet will be the 1,016-foot Shard of Glass, which was designed by Renzo Piano and will stand on the South Bank of the Thames by London Bridge.

``On the commercial side, retail is slightly weak, industrial is okay, and the offices market is doing the best,'' Stubbs said. ``There's still tremendous pent-up demand in the housing market too.''

House prices rose 6.7 percent in March from a year earlier, the most in almost four years, property research company Hometrack Ltd. said March 26. London and the southeast of England led gains on the month, outpacing Wales and the North of England, where values were unchanged.

Overall construction expanded 0.8 percent in the fourth quarter, up from 0.7 percent in the previous three months, the Office for National Statistics said March 28.

London's building boom may keep up momentum in the run-up to the 2012 Olympic Games, which will cost 9.3 billion pounds ($18.4 billion) to host, according to a March 15 statement by Culture Secretary Tessa Jowell. The event will be the culmination of Europe's biggest public construction project.

The Olympics will pose a challenge to the building industry as it saps demand for workers from projects across the rest of Britain, said Brian Williams, a surveyor at Fletcher McNeill in London, cited in the report.

``London 2012 will ultimately attract a disproportionate level of labor from the whole country,'' Williams said.