Construction activity still rising

The Irish construction sector ended 2016 with activity in residential and commercial building continuing to rise, but civil engineering remains weak, according to the latest monthly Ulster Bank construction report.

Construction activity still rising

The Ulster Bank Construction Purchasing Managers’ Index, a seasonally-adjusted index designed to track changes in total construction activity, posted 58.9 in December, down from the reading of 59.8 in November but still signalling a substantial monthly increase in activity. A reading above 50 signals growth.

Construction activity has now risen in each of the past 40 months, with panelists mainly linking the latest expansion to higher new work volumes.

Simon Barry, Republic of Ireland chief economist at Ulster Bank, said: “Both the residential and commercial sub-sectors remain particular sources of strength for survey respondents, with activity in both categories continuing to rise at rapid rates, albeit slightly less rapid than was the case in November.

Civil engineering remains an area of weakness, however, with activity here decreasing for the second month running.”

Civil engineering activity slumped from 47.6 to 44.3, decreasing for the second month running and at the fastest pace since April 2014.

However there was also a stark warning that demand for office space in Dublin’s central business district was continuing to outstrip supply.

Demands for office space from FDI, international IT and financial services could lead to indigenous Irish companies being priced out of Dublin’s city centre, according to Lisney’s annual property review and outlook.

Lisney warned the situation was likely to be exacerbated by the predicted influx of Brexit-related lettings.

James Nugent, chairman of Lisney, said: “Whilst it is encouraging to see Ireland continuing to attract FDI and major IT and financial services companies, continued demand for prime city centre locations from these businesses where vacancy rates are at among the lowest levels historically is causing rents to increase significantly.”

He added it could cause “a perfect storm of sorts for indigenous Irish companies” looking for prime affordable office space.

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