London cost consultant Exigere has said it expects more developments to come out of the ground next year as investors’ confidence gradually improves.

In its latest update, the firm said in its report for Q4 this year that “investment conditions are becoming increasingly supportive”, adding: “Development projects are progressing, albeit at a slower pace than pre-downturn levels.

“In terms of commercial projects, London is leading the way. Agents report a positive outlook for demand in both the City and the West End heading into 2025. [There is also] notable activity also occurring in cities across the East and South-east.”

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Investors’ confidence is improving, Exigere said

But it said subdued GDP growth in the UK economy and the rate of projected interest rate cuts by the Bank of England continued to act as a handbrake on sentiment.

And it warned the “threat of supply chain insolvency continues to pose heightened delivery risks”.

It added: “The past 18 months have been turbulent for the construction supply chain, with confidence in the sector significantly shaken.

“Fixed price contracts combined with inflationary shocks form a toxic mix in a low-margin industry where cashflow is king. But this is only part of the problem. Legal disputes over substandard workmanship and misguided strategic decisions to enter new sectors without appropriate expertise have also affected profitability.”

It said that its tender price index forecast a rise of 2.5% this year, followed by rises of 3% and 3.5% in the following two years respectively.