Construction industry crisis not over with output to fall
It will fall to €8.5bn next year and bounce along the bottom for a few years after that before any sign of a pick-up.
These are the latest findings from Davis Langdon, a consultancy group active in the Irish market.
Company director, Paul Mitchell, says this will leave output well below the figure of €18bn, identified by the Construction Industry Council in 2009 as the long-term sustainable level or the 12%-15% of GNP identified by DKM Economic Consultants as the long term sustainable level of output.
For the foreseeable future the analyst says public sector contracts will be the only game in town.
With the residential sectors contribution slashed from 65.9% in 2006 to 20.8% in 2011, “the public sector has seen its share increase from 21% to 73%, despite having been reduced from €6bn to €4.5bn,” said Mitchell.
In the short- to medium-term, those sectors hit by oversupply during the boom, including the housing, retail and tourism sectors, will remain in sharp decline while the public sector, industry and infrastructure will decline at a slower rate than seen last year, he said.
On the plus side, the huge adjustments forced on the sector have led to significant improvements in the value-for-money available “in the more sombre environment,” he said.
The combination of much reduced capital costs and moderated pay expectations has greatly added to the competitiveness of the sector, he said.
Tender prices in 2010 saw a continuation of the sharp decline with an average decline of circa 7% over the year. 2011 should result in modest tender price increases of around 3% over the year.
As projected housing output for 2011 is set to be down on 2010 levels to circa 7,000–8,000 units followed by a potential slight pick-up in 2012 to 8,000-9,000 units, which is way off the highs of the 90,000 units delivered in 2006.
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