UK construction and property
- HS2 | The National Audit Office’s (NAO) latest report shows that the price of the delayed HS2 Euston station has increased to £4.8bn since 2020 (its 2020 budget was £2.6bn) and is now £400m more than the larger scheme it replaced. The NAO warned that a “further reset is required” and that the DfT and HS2 cannot demonstrate value for money. Up to the end of 2022, £1.5bn had been spent on land purchases and preparatory work in the area and £568m on the station up.
- EPCs | As of 1st April 2023, landlords are unable to continue to let a commercial property with an EPC lower than E. Property consultants Rapleys has warned that 130,000 properties (93m sqft) across England and Wales are not up to the standard and suggests and estimated cost to improve of £13.95bn.
- Fire safety | The Construction Industry Training Board has recommended that all construction workers enrol on a fire safety course after discovering a worrying lack of awareness. Its first course, Fire safety awareness in construction and the built environment is free and aimed at workers of all levels and occupations.
- Commercial deals | Investors made deals worth £6bn in Q1 2023 for offices retail, and industrial properties, according to CoStar. Whilst this is an increase in levels seen at the end of 2022, it is half the 10-year average. Deals in London were dominated by Asian investors, who accounted for three-quarters by volume.
- Business rates revaluation will come into effect from 1st April 2023 and will be the first of its kind for six years. The London office sector is expected to face an additional £1.3bn of business rates over the next three years according to Altus Group, whilst retailers will see rates fall as shop rateable values have fallen. Colliers commented that some office occupiers (particularly those in the tech and creative industries) would be priced out as rents and rates in fringe locations have increased at a greater pace than in traditional core locations. The recent Budget gave support to small businesses occupying self-contained units, but not for those in open-plan or shared areas.
- House building levels have fallen, helping to slow house building cost inflation as measured by the BCIS Private Housing Construction Cost Index. The BCIS found that inflation peaked in Q2 2022 at 15.3%. It also expects output in the market to fall by 15.5% this year.