Savills - General - London, UK wide

Date: 10 Mar 2010

Sharpest rise in commercial development activity since May 2007.

KEY FINDINGS
Commercial developers signalled a rise in overall business activity in February, and the rate of expansion was the fastest since May 2007.

The increase in development activity was linked to improved economic conditions and a rebound following weather-related disruptions in January.

Around 28% of survey respondents indicated a rise in total commercial activity in February, compared to 11% that reported a decline. As a result, the Total Commercial Development Activity Index posted +16.9%, up sharply from -2.4% in January.

February data indicated that growth of overall activity was largely driven by increased work on private sector projects.

FUTURE EXPECTATIONS
Survey respondents indicated a positive outlook for commercial development activity in the next three months.

However, business sentiment was slightly weaker than the long-run series average and the lowest since July 2009.

Developers were the most confident about the prospects for industrial/warehouse projects and remained least optimistic about office activity.

Expectations of growth were linked to improving client demand, although some firms noted that the forthcoming UK general election had created some uncertainty about public sector work.

SUMMARY OF ACTIVITY
Growth momentum was much stronger in the private sector than the public sector in February.

Higher levels of business activity were recorded in seven of the nine areas of the commercial development sector monitored by the survey.

The sharpest rates of growth were in private sector new build, followed by refurbishment and industrial/warehouse activity.

Public sector office activity and public sector new build both continued to decline in February.

Total commercial activity

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