Savills : sentiment survey sees build costs and timescales increase

The Savills Programme and Cost Sentiment Survey (S.P.E.C.S) has risen by 11bps in the last quarter to 17 out of a possible 24, signifying that both build costs and timescales have increased for the first time this year as a result of ongoing macro economic uncertainty.

The survey, which is based on 48 separate indicators, tracks sentiment regarding the cost of construction, costs of fit-out and associated time scales for all grades and geographies of commercial and residential real estate across the UK. For example, a score above zero demonstrates that costs and timescales are generally rising, whereas a score below zero indicates a fall. For 2016 so far, Savills has recorded an average quarterly score of 10.5, meaning that the latest quarter is above the current index average.

Savills notes that the ongoing currency volatility has already directly impacted overall build costs, as EU imports of materials are affected by the decrease in the value of the pound.

Furthermore, sentiment recorded by Savills as part of S.P.E.C.S, shows that no sector or geography is seeing costs fall in the aftermath of Brexit. However, certain sectors have more specific drivers, retail for example is adapting to new format stores, incorporating click and collect points and undertaking better quality fit-out, and has therefore seen costs increase. Whereas the warehouse sector has seen a pause in speculative development and the price of its key component, steel, stabilise.

Simon Collett, head of building and project consultancy at Savills, comments: 'The second edition of S.P.E.C.S has highlighted how project delivery, in different sectors and geographies, is being impacted following the EU Referendum. Our index demonstrates that for the first time this year both costs and timescales are increasing. Looking forward, we expect there could be further volatility to the index once Article 50 is set in motion.'

*The survey is based on sentiment recorded by Savills specialist project managers

Click here to see the the full SPECS report