Pre-lets or sales will be the “new normal” when it comes to kick-starting new commercial or residential developments according to the team behind a major annual survey into the sector.

Despite Birmingham enjoying more than half of all new UK city development projects according to the latest Drivers Jonas Deloitte Crane Survey, the outlook for new offices or apartments remained relatively bleak.

However, according to DJD’s head of agency Philippa Pickavance, there was plenty to be upbeat about for Birmingham in what remains a very challenging environment.

She said: “I suppose it is just a matter of timing that we have some of these bigger infrastructure and amenity projects coming online at the same time like the library and New Street but then we are the second city so there is clearly some confidence in the marketplace.

“It has also been the education sector and hotels that have been very strong and the point from the report is that in terms of residential we are still better than other cities although it is down on previous years and the same is for offices which is of no surpirse because of the lack of demand.

“The new norm will not be big speculative offices in the future but schemes will need significant pre-lets before they start.

“Developers won’t want to take the risk and they would also struggle to get funding to get a development up and running.

Ms Pickavance said the city would still have significant amount of Grade A stock even with no further speculative development because of the amount of refurbishment taking place in the city such as PwC’s old building in Bull Street and a major refurbishment at Brindleyplace.

She said: “I’m not so concerned about the amount of Grade A stock because the reality of life is that the demand is not consistent at the moment.

“There will of course be some demand and there are rumours of major possible requirements such as 120,000 sq ft for Deutsche Bank but that will be in two years so people are taking a longer run in time.”

According to the survey, which measures and forecasts construction output for the UK’s five major cities, Birmingham accounted for 56 per cent of all new construction output and was the only city showing an increase in new construction starts, showing 14 new starts compared with eight during the previous year.

Significant new projects include The Pallasades Shopping Centre and John Lewis store at the New Street re-development and various educational buildings at Aston University, UCB and BCU.

The survey, which takes place annually with data collected from July to August, monitors development activity across the office, retail, residential, student housing, education, leisure and hotel sectors.

The five UK cities included are Birmingham, Manchester, Leeds, Glasgow and Edinburgh, and for the first time this year the survey has been published as a comparison report between those cities surveyed, highlighting strengths and weaknesses across sectors and regions.

Birmingham was the only city to record an increase in new construction starts, with a 75 per cent increase on last year while activity in Manchester and Leeds fell and Edinburgh and Glasgow recorded no new starts at all.

Looking ahead, the survey found that student housing schemes and education projects are still likely to be the most active sectors – nationally and regionally - due to a drive by universities to attract fee paying students. Although activity in the commercial and residential sectors are low, Birmingham by comparison is the best performing region in the residential sector due to two new starts that represent the total residential new starts for all five cities in the survey.

Jill Astley, director of development at Drivers Jonas Deloitte, said: “Residential development won’t stop completely but it will be a modest amount and will move from the city centre. We all need somewhere to live but people are looking at different flavours of accommodation. I don’t think we have an over-supply situation in terms of the number of buildings and developments, which is at a quite healthy level.

“People need to be able to move around so if everything was fully occupied then how do you have churn but any new starts would need to be significantly let or sold before they even get off the ground.”