South: Savills reports rise in build costs and timescales

Savills’ latest Programme and Cost Sentiment Survey reports that build costs and timescales for construction have risen for the first time this year in the quarter following the EU Referendum vote because of ongoing macro-economic uncertainty. No sector or geographical area is seeing costs fall in the aftermath of Brexit.

The survey, which is based on 48 separate indicators, tracks sentiment regarding the cost of construction, costs of fit-out and associated time scales for all grades and geographies of commercial and residential real estate across the UK.

For example, a score above zero demonstrates that costs and timescales are generally rising, whereas a score below zero indicates a fall. For 2016 so far, Savills has recorded an average quarterly score of 10.5, meaning that the latest quarter is above the current index average.

Savills notes that the ongoing currency volatility has already directly impacted on overall build costs, as EU imports of materials are affected by the decrease in the value of the pound. 

Certain sectors have more specific drivers. For instance, retail is adapting to new format stores, incorporating click-and-collect points and undertaking better quality fit-out, and has therefore seen costs increase. The warehouse sector, on the other hand, has seen a pause in speculative development and the price of its key component, steel, stabilise.

Credit: CoStar