Savills index hits lowest ever level last month, with private work worst affected
Commercial development activity fell in October as economic conditions worsened, new data from Savills has shown.
Around 55% of developers reported a drop in overall activity last month, compared with just 6% reporting a rise.
The resultant net balance, the Total Commercial Development Activity Index, fell to minus 49.7%, from minus 40.7% in September, its lowest level since the survey began in March 2003.
Private sector work also fell at a considerably faster rate than public sector development, largely attributed to a downturn in private sector capital expenditure.
Developers also noted that deteriorating economic conditions had led to a marked decline in occupier demand.
Commercial developers said they were highly pessimistic in October about the three-month outlook for activity, with business sentiment falling to a new record low.
Commenting on the October survey, Mat Oakley, head of Savills' commercial research department, said: “With this month's survey being carried out before the latest massive cut in the UK base rate, it is too early to say whether this has had any impact on developers' confidence.”
But he added: “While we do not expect a rebound to positive territory next month, the fact that both swap rates and Libor are steadily falling should provide some good news for developers.”