Planning and construction 21st Century Gold Rush?
Table 1 tells us very little. It gives the impression that nothing much is going on. Construction completions, as we expected, increased by 32% in 2012 and starts were marginally down on the previous year’s figures. It is not until we look at Table 2 that the real picture
becomes apparent. In last year’s report we commented on the dichotomy between construction starts in the inner and outer boroughs. The number of starts in the outer boroughs grew by 53% in 2011 compared with a mere 7% in the inner boroughs. The situation at the end of 2012 was almost the complete reverse. Construction starts in the inner boroughs were up by 42%; in the outer
boroughs they had dropped by 21%. The reversal of fortune is due to two main factors: the continued scarcity of mortgage availability, and the relative abundance of foreign equity. One could argue that these two factors were in place at the end of 2011, but if that was the case, why did we not see a surge in the number of starts at the end of 2011 in the inner boroughs? It is our assertion, a point we made in the 2012
update, that during 2011 equity was chasing super- prime existing stock. It seems now that that stock is slowly being exhausted, and to cater for the continuing demand developers are building again.
Table 1: London development pipeline, unit numbers and percentage change 2004-2012 – private and social units combined Developments of 10 units or more
Year 2004 2005 2006 2007 2008 2009 2010 2011 2012
%change since 2011 %change since 2010 %change since 2009 %change since 2008 %change since 2007 %change since 2006 %change since 2005 %change since 2004
Applications
84,533 92,683 61,928 40,830 53,138 47,970 41,659 60,784 43,768 -28% 5%
-9%
-18% 7%
-29% -5%
-48% Permissions 91,270
105,182 128,653 132,490 157,052 176,498 181,383 177,991 216,685 22% 19% 23% 38% 64% 68% 38%
137%
Under construction 36,736 32,985 35,842 40,476 30,473 20,255 24,771 29,541 26,865 -9% 8%
33%
-12% -34% -25% 20%
-27% Completions
21,423 25,283 24,394 21,722 25,938 21,209 15,195 17,916 23,719 32% 56% 12% -9% 9%
-3% 10% 11%
Starts
25,233 21,403 26,041 27,056 16,345 11,327 19,064 23,483 20,322 -13% 7%
79% 24%
-25% -22% 42%
-19%
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