A “huge proportion” of luxury homes planned or under construction in London are unlikely to be built on time, a new report warns.
EC Harris’ Prime Resi report 2014 reveals significant capacity issues at every level of the capital’s construction industry will delay completion dates.
The consultancy claims up to half the new high-end homes planned in the next five years could end up falling well behind schedule due to a lack of available contractors to deliver the required quality of work.
The report reveals the number of luxury homes coming forward in London is up 20% on 2013.
Fuelled by buyers’ demand, the 10-year pipeline has hit a record high of around £60bn of properties, or 25,000 new homes.
Mark Farmer, EC Harris head of residential, said: “With the UK economy back on track and London deemed a safe haven for international property investors, it’s not surprising that demand for luxury homes is fuelling ever-increasing development.
“Where we are starting to observe real problems, though, is in the construction process. There is simply not the capacity out there to meet demand and many projects will undoubtedly fall by the wayside or experience delivery difficulties due to sheer lack of resources.”
EC Harris said the South Bank is proving the most popular area of the capital for development, accounting for around a third of new projects; followed by Chelsea & Fulham and the City.
It argued the rush to secure contractors for these projects had provoked significant price inflation in the construction sector as developers seek to urgently get building work underway.
Farmer added: “Many developers and investors, when in a position to do so, are therefore looking to jump the queue and are paying premiums for construction so they can deliver on promises they have already made to their purchasers.”