Commercial building activity shrank for a seventh consecutive month in May and developers expect further contraction in the next three months, a survey showed yesterday.
Research by Savills showed three times as many commercial developers reported a fall in activity in May as those signalling a rise.
The property services firm’s Total Commercial Development Activity Index showed a net balance of minus 19.7 per cent - slightly up from minus 20.8 per cent in April - but still the second lowest reading in the survey’s history.
Commercial developers highlighted weak market sentiment and tighter credit availability as having a negative influence on activity levels in May.
Office development activity in both the public and private sector was particularly hard hit.
The survey pointed to pessimistic expectations for the next three months among developers, with many saying restricted lending and wider economic worries were likely to constrain demand.
But Savills head of commercial research Mat Oakley said the company expected market concerns to ease by the end of the year. He said: “With only 10 per cent of developers seeing a rise in activity this month, it is clear that concerns about bank lending and tenant demand remain rife.
“We expect both concerns to ease towards the end of 2008 as a clearer economic and capital markets picture emerges.”