Construction BUSINESS

Global infrastructure consulting firm AECOM anticipates that the value of Ireland’s construction industry will hover around €32 billion this year, mirroring the figures from the previous year. In its annual review, the firm notes that the construction sector in the country experienced heightened stability and predictability in contrast to the global upheavals of recent years.

AECOM’s projections include a national average tender price inflation of 4% for the year. While the cost of certain construction materials, like steel, has decreased, others such as concrete have seen price hikes. Resource constraints and elevated labor costs are contributing to upward pressure on prices.

According to AECOM, the residential sector is on track to surpass government targets of 29,000 completions for 2023. Commencements in the first 11 months of the previous year increased by 18% to 29,634 compared to the same period in 2022 and reached 31,429 in the 12-month period.

However, AECOM raises a cautionary note, suggesting that the government may face challenges achieving its higher 2024 target of 33,450 new homes without implementing extended affordability measures and incentives to stimulate purchases and enhance social housing delivery.

The slowdown in the tech sector has predictably impacted the commercial office market in Dublin. Combined with this sectoral reset, businesses are grappling with defining the “new normal” for employee presence in the office. Consequently, the influx of in-construction commercial office space to the market and existing tenants scaling back on lease renewals or sub-letting has led to a rise in vacancy rates in Dublin and other regional cities, ranging from 15-18%.

Regarding public projects in Ireland, AECOM expresses hope that the approval of the Planning and Development Bill 2023 by the Cabinet, the most significant reshaping of the planning system in over two decades, will expedite the pace at which projects can be delivered.

The economic and construction review also assesses progress toward decarbonization and energy security goals. AECOM Director and Ireland Country Lead, John O’Regan, emphasized the need for faster and more decisive action to bridge the gap between ambition and implementation in meeting emission reduction targets.

Despite challenges such as inflation aftershocks, limited labor resources, and high labor costs, O’Regan remains optimistic about the year ahead, stating, “Overall, Ireland’s economy is in a positive place. There is continued strong growth with mechanisms in place to ensure that capital investment continues at a consistent rate. This gives assurance to the construction sector that business will continue and importantly it gives confidence within the sector to invest in people and skills.”

Source- RTE