With an estimated population of 4.8 million, the Republic of Ireland is made up of 26 counties and covers an area of approximately 68,890 sq km. It is in the UK's top five largest export markets and, in 2018, accounted for 5.68% of its exports. In February 2020, IBEC, the group representing Irish businesses, published its Quarterly Economic Outlook and predicted GDP growth of 3.7% in 2020. Elsewhere, in its own quarterly bulletin covering Q4 2019, the Irish Central Bank predicted that Ireland's GDP would grow by 4.3% in 2020 and by 3.9% in 2021; this, however, was subject to a Brexit deal between the UK and the EU.
The profile of the Irish construction industry parallels that of UK construction and, therefore, business activities, practices and procedures are very similar. Currently, it is enjoying a period of growth, buoyed by high levels of private inward and state investment and an expanding economy: however, at the time of writing (Jan 2020), the possibility of a disorderly Brexit is the cause of some uncertainty as the Irish economy is closely linked to the UK’s.
According to consultancy Linesight's 2020 Ireland Market Review, output of the Irish construction industry was estimated at €25 billion in 2019 and they were predicting final figures for 2020 to come in somewhere between €26.5 and €27 billion. Elsewhere, Turner and Townsend’s International Construction Market Survey 2019 said, “.... the Irish market is hot with official figures for Q3 2018 showing annual growth in construction gross value added above 14 percent. In what is the first wave of large projects following an upturn in economic performance there is a lot of office, residential and student residential projects underway.”
The CIF’s (Construction Industry Federation) 2019 Construction Industry Economic Update posited that the total value of GFCF* investment in Building and Construction was estimated at €26 billion (current prices) in 2018. Overall, building and construction investment continued to increase strongly, up 20% in 2018. CIF reported that final data for growth in overall building and construction investment in 2019 was expected to be approximately 15.6% in 2019 and 10% in 2020. They also reported that the Department of Finance had predicted that the GFCF* in the sector will increase to €41 billion by 2023.
(*GFCF - Gross Fixed Capital Formation is defined as acquisitions less disposals of fixed assets)
In terms of employment, the CIF’s Update said, “Direct construction employment grew by +7.9% or 10,600 persons to 145,500 persons (seasonally adjusted figure) in the year to the end of Quarter 4 2018.”
In terms of residential activity, the Linesight report estimated that there were 21,241 dwellings completed in 2019. In 2020 it estimated that this number will increase by 3,000 (14%) bringing the predicted total of units constructed to approximately 24,500. Regarding the commercial offices sector it predicted that most activity would be located in Dublin and its suburbs, but noted that there was evidence of increasing activity in Cork, Galway and Limerick, albeit at a smaller scale.
In other areas the report predicted that the healthcare sector was likely to experience growth in 2020, particularly in terms of construction of short-term and long-term nursing homes. Elsewhere it was noted that the increase in online sales acting as a driver for additional logistics facilities in the industrial sector and in the hospitality sector, it calculated that there were approximately 5,000 new bedrooms under construction, and it expected that approximately half of these were due for completion in 2020.
Looking ahead, the Linesight report believe that the pipeline for residential construction remained strong, underpinned by the Government’s commitment to increasing expenditure on public capital projects by 10% in 2020 to a level of €8.2 billion.
An understanding of the latest industry sentiment can be found from the Ulster Bank monthly construction Purchasing Managers Index (PMI) data. Click on any of the headlines below to download the release for that month: