The underlying value of UK construction project starts was 24 per cent lower for the three months to June compared to the same period in 2010, according to industry analyst Glenigan.
Glenigan also reports that hotel construction in London fell 73 per cent year on year. '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,' said Glenigan economics director Allan Wilen.

However, retail was the only sector to buck the trend with a 13 per cent year on year increase as the major supermarket chains press ahead with their expansion plans. Mr Wilen added: 'The supermarkets continue to get good value for money from the construction industry as it competes fiercely for new work.'

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

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