Construction to increase by 7%

Construction activity is expected to grow by up to 7% this year, but such growth shouldn’t be interpreted to mean a full-scale recovery is underway in the sector.

Leading construction sector consultancy AECOM Ireland, formerly Davis Langdon, yesterday predicted a 5% to 7% rise in building output during 2014, mainly on the back of increased activity in the commercial and residential sectors and a recommencement of public-private partnership infrastructure provision.

However, speaking at the launch of AECOM’s annual review at the firm’s ‘Positive Leadership’ conference in Dublin, yesterday, AECOM Ireland director, Paul Mitchell said that while the signs are positive, he would caution against coming to the conclusion that the country is on the brink of a recovery in construction.

This is despite 2013 marking the first year since the start of the economic downturn in which certain areas of the building sector saw growth and firms started becoming more optimistic.

“It is still too early to say whether there will be a recovery in the Irish construction industry. The reason for this caution is that any recovery is starting from a very low base and there are a number of downside risks,” he said.

“One of these risks arises from the fact that the public capital programme will decline by 2.8% in 2014 and a further 2.5% in 2015. When tender price inflation is taken into account, the reduction in public-sector construction activity is even greater still,” Mr Mitchell said.

AECOM also cites the ongoing mortgage debt crisis, the remaining over-supply of houses on a nationwide level (despite demand outstripping supply in parts of Dublin) and Ireland’s exposure to any further downturns in the global economy as reasons to be cautious with regard to any big recovery.

The company also wants the Government to introduce an incentive plan for new office development in order to help the construction sector at the current “fragile” point in the recovery cycle and to meet the demand from foreign multinationals looking to locate here.

AECOM is predicting more new office builds this year, leading to a significant increase in 2015, a 2% increase in construction costs in 2014 and a 3% rise in tender prices.