Construction Tender Prices Continuing to Suffer as
Eurozone Crisis Continues
2 July 2012
A turnaround in UK tender prices is unlikely until the
first quarter of 2013 for London and not until the end of next year
for the rest of the UK due to the stress on the economy, according
to analysis in the latest Market View report from global Built
Asset Consultancy EC Harris.
The quarterly report, which tracks tender prices in the UK
property and infrastructure sectors, predicts that the continued
uncertainty across Europe will continue to impact the UK economy
and hurt the construction sector. Nationally, tender prices are
expected to fall by 2.5% in the year to the second quarter of 2013
before rising by 1.8% the following year. Tender prices are
expected to increase to 3.5% in the year to the second quarter of
2015.
Paul Moore, Head of Cost Research at EC Harris comments: “With
the UK economy back in recession and Eurozone recovery strategies
still not boosting market confidence, the pressure on contractors
can only increase. Although Sterling remains strong, this is
unlikely to have a positive impact on market price until the
Eurozone crisis is resolved. Clients therefore need to be cautious
when relying on the current Euro exchange rates when making cost
plans and ensure that they are protected against the potential
insolvencies of their sub-contractors who may have overstretched
whilst trying to take advantage of favorable rates.”
The difference in activity levels between London and the rest of
the UK is expected to continue. In London, potential workload in
the commercial offices sector and a continued demand for high
quality residential schemes means that the fall in tender prices is
expected to turn around in the first quarter of 2013 and the
forecast is that tender prices will rise by 0.5% in the year to the
second quarter and by 3.5% the following year. A further 4.6%
increase is expected in 2015. Whilst there is a strong pipeline in
London, with orders increasing by 8%, away from London the
commercial office market is stagnating with fewer potential
projects.
The forecast for infrastructure is that tender prices will rise
by 1.7% by the second quarter of 2013 and continue to rise to 2.4%
over the following year. Thereafter the expectation is that tender
prices will rise by 3.4% in 2015 and by 4% over each of the
following two years.
For a copy of the Summer 2012 Market View, please click
here.
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For further information please contact:
Andy Rowlands, Group PR Manager
EC Harris
+44 (0) 20 7833 6662
andy.rowlands@echarris.com
About EC Harris
EC Harris is a leading
global Built Asset Consultancy. As an ARCADIS company, we have
access to approximately 21,000 professionals worldwide operating in
over 70 countries, 300 offices and generating in excess of
€2.4billion in revenue. Working across a wide range of market
sectors, we help our clients make the most from the money they
spend on their built assets. For more information visit
http://www.echarris.com/.