Building tender prices in London are set to jump 5.3% over the next year, according to a report from cost consultant EC Harris.
The rise, for the year to 30 June 2002, is more than 50% higher than that forecast for the rest of the UK. It is expected to fall to 4.7% in the following year.

EC Harris attributes its figures for London to high levels of demand for new and refurbished office space, as well as rising wages.

The report adds that speculative commercial developments was reducing in London, making tenders "not as red hot" as they have been for the past 18 months.

It added that the market in the rest of UK, which is forecast to rise by an average of 3.4%, was fragmented, with little uniformity in prices.

Richard Clare, chairman of EC Harris, said the forecasts proved the sector was in a good state. He said: "Despite continued weakness in the American economy and the crisis in manufacturing, construction workload looks to be secure for the next couple of years."

The figures came in the same week as the RICS arm Building Cost Information Service found that tenders had jumped by 7% in the first quarter of 2001.

Peter Rumble, a researcher for BCIS, said the rate of tender price increase could be tempered by the slowdown in the US economy.