An annual Irish construction industry review, published by AECOM, the infrastructure consulting firm, expects the value of the construction industry in the republic in 2024 to be in the region of €32bn, on par with 2023’s value.
Last year saw stability restored to the construction sector compared to the years 2020 to 2022 however there were also new challenges such as the Israel – Gaza conflict and uncertain financial markets.
The price of some construction materials, such as steel, have come down but others including concrete have increased. Resource constraints and high labour costs are also keeping upward pressure on prices. With stability in terms of volume and workforce, AECOM is predicting a national average tender price inflation of 4% in 2024.
In relation to the residential sector, AECOM says completions are on track to exceed the government’s ‘Housing For All’ target of 29,000 for 2023. Commencements in the first 11 months of last year saw an 18% increase to 29,634 on the same period in 2022 and 31,429 in the 12-month period.
Enhance social housing delivery
However, AECOM warns the government may struggle to achieve its higher 2024 target of 33,450 new homes without extended affordability measures and incentives to boost purchases and enhance social housing delivery.
The slowdown of the tech sector has unsurprisingly had a direct impact on the commercial office market in Dublin. Coupled with this sector resetting, businesses in general have been struggling to define and establish the new normal in terms of employee presence in the office.
The combination of in-construction commercial office space coming to market and existing tenants reducing their requirements on lease renewals or through sub-letting has led to an increase of vacancy rates in Dublin and other regional cities in the range of 15-18 per cent.
In relation to public projects in Ireland, AECOM is hopeful the approval by the cabinet of the Planning and Development Bill 2023, the largest reshaping of the planning system in Ireland for more than two decades, will quicken the pace at which projects can be delivered.
This year’s economic and construction review and forecast also takes stock of progress towards decarbonisation and energy security goals.
'Progress not happening quick enough'
AECOM director and Ireland country lead John O'Regan said: "There has been a major change in the way we produce, consume, and manage energy driven by policy and regulation changes but progress is not happening quick enough. Faster, more decisive action is needed to close the gap between ambition and implementation and to ensure we meet our emission reduction targets.
"Last year the construction sector across Ireland enjoyed a greater degree of stability and predictability in contrast to the major global events of previous years. Even though the aftershocks of inflation as well as a lack of available labour resources and high labour costs continue to be felt, there is good cause to be optimistic about this year.
"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."