Construction BUSINESS

The construction industry in Ireland is poised to face a slight decline of 1% in 2024, according to estimates from industry analysts. This contraction is primarily attributed to several factors, including soaring material costs and energy prices, compounded by disruptions in the supply chain stemming from recent Red Sea ship attacks by the Houthis and US-UK airstrikes.

Data from the Central Statistics Office (CSO) reveals a concerning trend, with the average wholesale price index for building and construction materials surging by 7% year on year in the first nine months of 2023, following a steep 17.5% increase in 2022. Labor shortages further exacerbate the situation, driving up overall construction costs as the industry competes with other sectors for skilled workers.

Investor confidence has taken a hit amid uncertainty surrounding the Red Sea conflict and monetary policy tightening. Declines in the number of planning permits approved for construction signal a potential weakening of output levels in the coming quarters, with a 12.6% year-on-year drop recorded in the first nine months of 2023, following a 16.2% annual fall in 2022.

However, there is hope on the horizon, with forecasts suggesting a turnaround for the Irish construction industry from 2025 onwards, contingent upon broader economic improvements. Projections indicate an average growth rate of 4.4% between 2025 and 2028, driven by investments in crucial infrastructure projects spanning transport, electricity, and housing.

Under the Climate Action Plan (CAP23), the government aims to significantly increase the share of renewable energy in the country’s electricity mix, setting ambitious targets for onshore wind, solar, and offshore wind energy production by 2030. This initiative, coupled with investments outlined in the National Development Plan (NDP) 2021-30, totaling EUR165 billion ($169 billion) over a decade, is expected to fuel growth in the construction sector.

Of note is the “All-Island Strategic Rail Review,” which proposes extensive rail developments in both the Republic of Ireland and Northern Ireland, with an estimated investment of EUR36.8 billion ($37.7 billion) by 2050. Electrification of railway lines, construction of new routes, and enhancements to existing infrastructure are among the key recommendations poised to reshape the transportation landscape.

Despite current challenges, the construction industry in Ireland remains resilient, with opportunities for growth and innovation on the horizon. By navigating obstacles effectively and capitalizing on strategic investments, stakeholders can position themselves for success in the evolving landscape.