Based on their Main London Annual Survey, Aecom revealed in their latest report that major contractors, with a combined turnover of £6 billion, have already booked up their order books for 2025. This comes as tendering activity has dropped significantly, with only 60% of contractors engaging in new bids for 2024, a notable decrease from the 72% seen in 2023. Aecom identifies a threshold of 60-70% as a sign that the market is stable and not facing major disruptions.
The cautious approach to tendering is largely a response to the economic climate and the adjustments contractors are having to make to comply with the Building Safety Act (BSA). With a housing target in London of nearly 88,000 homes annually, only about 38,000 are being completed. Contractors are also facing potential slowdowns in the residential market due to ongoing labour shortages, affecting both skilled and unskilled positions. The current pace of housebuilding projects is masking the severity of this issue, and once the new processes for higher-risk buildings are streamlined, a lack of skilled labour may hinder progress.
Despite these challenges, Aecom’s findings indicate that contractors see a more stable market than in previous years. The construction sector’s outlook remains positive, bolstered by a healthy pipeline of work and government support for infrastructure projects. London firms anticipate inflation to average 2.9% in 2025, a slight decrease from 2024, aligning with Aecom’s forecast of 2.94%.
