The underlying value of UK construction project starts was 24% lower for the three months to June compared to the same period in 2010 according to the latest data from construction industry analyst Glenigan.

Hotel construction in London fell 73% year on year, for example: "Last year saw a surge in hotel starts as clients pulled forward projects to ensure completion before the Olympics.

"The current lull is forecast to be temporary with the budget hotel chains expansion plans underpinning future growth," commented Allan Wilen, Economics Director at Glenigan.

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Retail was the only sector to buck the trend with a 13% year on year increase as the major supermarket chains press ahead with their expansion plans.

Industrial and office construction starts were down 35% and 20% respectively as investors remain cautious against the backdrop of the weak economy and high inflation. Civil engineering project starts were 29% down due to a continued decline in infrastructure developments and a volatile utilities sector.

Residential construction was down 29% year on year as a result of private and public sector cuts. Private housing project starts were down 31% year on year, while social housing was down 26%.

"House builders continue to be reluctant to start new sites and are focussed on completing existing developments as the housing market remains sluggish. However the Government's Firstbuy programme will help to bridge the mortgage gap for first-time buyers and Glenigan forecasts that private house building will stabilise by the end of 2011. In contrast social housing will decline further as a result of continued public sector cuts," commented Wilén.

(CD/BMcC)