Earlier this month, Jim Kollaer wrote here on Construction Citizen that more than 400 new high rises are planned for London's skyline:
“That number is astonishing to me. That is 436 new buildings that will be added to the existing skyline. Sure, a number of them are either residential or mixed use, and the majority of them are office buildings; but it appears that the demand for the space is there waiting for the supply to catch up,” Kollaer wrote.
Jim's report was spot-on at the time, but last week’s vote by the British to exit, or “Brexit,” the European Union could severely hamper that construction market for a variety of reasons. One key problem is likely to be an increased scarcity of skilled labor for the projects currently on the books. The CEO of luxury property developer Northacre, Niccoló Barattieri di San Pietro, spoke to CNBC:
"We are already in a construction crisis with a severe shortage of skilled labour," Barattieri di San Pietro told CNBC Friday, adding that a vote to leave the EU would limit the number of workers joining the industry further.
His comments echo those of Chris Blythe, chief executive of industry trade body the Chartered Institute of Building, who wrote in a 2015 report: "Construction has always relied on migration to fill in gaps in the labour market – suddenly cutting off the supply of migrant workers risks seriously damaging the U.K.'s economic prospects."
Migrant workers currently fill around 12 percent of the approximately 2.9 million U.K. construction sector jobs, according to government figures and research by the London School of Economics.
Just before the vote of the UK to leave the EU, the Telegraph reported the construction industry had, at that point, defied the anxiety surrounding the intense debate:
The UK construction industry saw an almost 8pc rise in contracts in May, dispelling fears of a slowdown ahead of today’s European Union referendum vote.
According to data from Barbour ABI, which looks at all contract activity in the sector, £6.1bn worth of new contracts was awarded in May, 7.9pc higher than in the same month last year.
The number of construction projects agreed in the UK was 10.2pc higher than the same period last year, although it was down 10pc on April this year.
The majority of the contracts awarded in May by value were in Scotland, accounting for 24pc of the UK total, the research found. This was driven by the Beatrice offshore wind farm project in the Moray Firth, which is valued at £1.3bn.
This was followed by London, which had 19pc of contract value. The largest project awarded in the capital was a £325.8m deal with Canary Wharf Group to build new office building Ten Bank Street.
Immediately after the vote to leave the European Union, shares of home builders in the UK were the hardest hit, according to MarketWatch:
U.K. house builders' shares took a deep plunge in early trading Friday as investors reacted to the country's decision to leave the European Union.
"We expect the U.K. house builders to be one of the sectors of the market that reacts most negatively to the Brexit vote," said Canaccord Genuity before the market opened at 0700 GMT. The broker predicted a double-digit share price fall.
Once the market opened, shares of Barratt Developments PLC (BDEV.LN), the biggest U.K. house builder by sales, fell as much as 32% to 392.40 pence, while shares of Persimmon PLC (PSN.LN), which is the largest builder by market capitalization, dived as much as 40% to 1,250 pence.