In more disappointing news for tool and plant hire providers, demand for commercial construction may not rebound fully for another 11 years, according to new research. Leading insurer RSA (formerly Royal SunAlliance) has said that the part of the UK construction sector that delivers commercial property is unlikely to reach pre-recession levels before at least 2023, due to a “climate of trepidation” and an oversupply of available space.
As revealed in Construction News, RSA has put out a report entitled Castles in the Air - based on research with the Centre for Economics and Business Research – which finds that following the credit crunch £13bn was wiped off the £41bn value of commercial real estate construction output at its peak in 2007.
While London and the south-east saw sharp increases in growth over the year to March 2012 – 16.7% and 17.2% respectively – RSA still issued a subdued forecast, noting that the completion of major big-ticket projects such as the Shard, the Olympic Park and Westfield shopping centre (pictured) had left a “looming gap” in their wake.
Paul Greensmith, director of risk managed business at RSA, said: “The commercial real estate sector has been hit hard by the recession. While a return to the pre-recession highs of 2007 may not be wholly realistic, what’s important now is that developers approach new investment opportunities sensibly and with sustainable growth in mind.
“There is still an appetite for the right kind of development, with builds such as the Shard demonstrating that certain projects, particularly mixed use developments, are still going ahead.”