As explained in the introduction, the profile of the Irish construction industry parallels that of the UK’s 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. In this section, we summarise the current market and outlook for the principal sectors, according to commentaries from some of the leading industry organisations.
There is a significant shortage of housing in the country, which at first glance is surprising since, back in 2006 before the financial crash, Ireland reached the peak of its building boom and, with some 93,419 completions that year, was building more homes than the demographic trends required. Unfortunately, the subsequent downturn caused a rupture across the industry, as many workers were lost and finance for developments dried up. By 2015, the annual number of housing completions had reduced to just 12,666; however, the final figures for 2019 are expected to show completions reached some 21,500 (according to a report in the Irish Times in January 2020).
Compounding the housing problem is a mismatch in housing supply, with high availability in sparsely populated areas and an acute lack of availability in densely populated areas. In an interview with the Irish Independent in May 2016, the then Housing Minister, Simon Coveney, described the housing situation as a “...national emergency...”.
Through its Rebuilding Ireland initiative, launched in 2016, the Irish government pledged to double the output of overall housing to at least 25,000 per annum by 2021, with a range of commitments, including:
- Ensuring that an average of 25,000 homes are produced every year in the period to 2021, including over 47,000 social housing units over the period.
- The investment of €200m in key supporting infrastructure to get large sites moving and thereby increase the supply of affordable homes for sale and rental.
- To speed up the planning process with applications for 100+ housing units going straight to An Bord Pleanála (the national planning appeals board).
- To run competitions to encourage innovative housing design and delivery and to foster a skilled construction sector.
- To put in place a long-term 20-year National Planning Framework and land management strategy to make housing supply more stable and sustainable.
It may be that the Rebuilding Ireland programme will still leave a significant shortfall in housing supply and that the demand for new construction will remain intense. In December 2019, the Central Bank of Ireland published its report entitled ‘Population Change and Housing Demand in Ireland’. The summary is clear on the scale of the projected shortfall stating, “Assuming unchanged household formation patterns and net inward migration close to current levels, around 34,000 new dwellings would be required each year until 2030.”
A database of Irish contractors and housebuilders can be downloaded here.
Infrastructure, Industrial and Civil & Utilities
In 2018, the government published its 10-year National Development Plan, which is part of the wider ‘Project Ireland 2040’ plan, and outlines multi-annual capital investment of approximately €116 billion for the transport, health, education and energy sectors through to 2027.
In order to facilitate simplified access to the opportunities and progress of the various projects, the government has introduced a series of resources including the Investment Projects and Programmes Tracker, which is designed to “…..give the construction industry greater certainty about future infrastructure projects, to help it gear-up capacity and capability to deliver”. In addition, the MyProjectIreland interactive map provides information on the various projects and their geographic locations, whilst the report entitled Prospects: Ireland’s Pipeline of Major Infrastructure Projects provides specific information on the development programme and projects planned.
Civil and structural engineering practices in Ireland are included in a database which may be downloaded here.
Commercial, Retail, Hotel & Leisure
According to the latest Market Review from Linesight, activity in the commercial offices sector is continuing well “….with many new schemes under construction” and “….in the first half of 2019 the Dublin office market recorded more than 150,000 square metres of leasing activity”. However, the report also highlighted that the number and scale of new office developments under construction or due to start construction declined in 2019 when compared to previous years.
This moderation in commercial construction activity was addressed by the Society of Chartered Surveyors Ireland (SCSI). In its 2019 SCSI/PwC Construction Market Monitor, it reported “….there has been some suggestion of a moderation in the pace of growth in the private commercial market.” However, nearly 60% of surveyors to the SCSI/PwC Construction Market Monitor reported an increase in activity. Total investment in the sector topped €3.2bn in 2018 with similar transaction volumes expected in 2019.
Endorsing the continuing demand for commercial accommodation through 2020 and beyond is CBRE who, in its 2020 Real Estate Market Outlook said “Demand for office accommodation remains elevated and we are expecting another strong year in 2020 including some carryover of transactions from last year. We are likely to see some new schemes lodging for planning this year and we may also see some existing schemes going back into the planning process in an attempt to obtain additional height during 2020”.
Dublin is the main focus of commercial development and, looking at the prospects for 2020, in its report, Dublin Office Market in Minutes, Savills said, “On the supply side our prediction that new office development in Dublin would be modest in 2019 has come to fruition. However we believe that significantly more space will be rolled out in 2020 and are pencilling in gross completions of just under 260,000 sq m.”
In other commercial areas of construction, the retail market is slowing due to current uncertainties and the rise in online buying, while the hotel sector is another area currently performing well and enjoying strong levels of growth. In October 2019, the business advisory firm Crowe predicted that, between 2019 and 2024, the Dublin hotel sector market will see 6,000 new rooms being added to the existing stock of 19,000 (as of the start of 2019), representing a 30% increase over the five-year period.
Elswhere, in February 2020, Top Hotel Projects reported that “…in the coming years, 32 hotels will open in Dublin, adding another 4,680 rooms to the city’s hotel market”.
BuildingInfo provides details of some of the hotel construction projects in the planning pipeline here.