8
IRELAND REVIEW : VOLUME OF OUTPUT IN THE CONSTRUCTION SECTOR TO BE ON A PAR WITH 2022 BUT PRESSURE REMAINS DUE TO INFLATION AND MARKET UNCERTAINTY
AECOM , the world ’ s trusted infrastructure consulting firm , today published its annual Irish construction industry review , which states that Ireland will not experience any industry growth in 2023 but should remain on par with 2022 levels . The review states that while the value of construction output in 2023 will be in the region of € 34 billion , with € 32 billion recorded in 2022 , the marginal gain will be affected by inflation .
While inflation will remain a challenge next year , with AECOM predicting a 5 % tender price inflation rate across the industry , it is significantly lower than the 12 % that was recorded in 2022 , resulting in a record year for inflation for the sector .
In relation to the residential sector , AECOM says there is a significant risk that the ‘ Housing for All ’ target of 29,000 completions this year may not be met due to inflation , interest rate rises and market uncertainty generally , impacting on viability . 2022 saw the number of house completions increase significantly compared to 2021 . The current projected total of around 27,000 completions in 2022 exceeds the Government ’ s goal of 24,600 for the year . The Government ’ s average annual target is 33,000 to 2030 . The rolling 12-month average number of residential commencements peaked at 35,000 in March 2022 and have been declining since . AECOM is warning that there are signs that the viability challenge , which has been on a cliff edge , has in some instances tipped into negativity , as inflation and interest rates have risen .
Skills shortages continue to affect many sectors , including the construction sector , and in particular the retrofit sector . However , the numbers employed in the construction sector increased to 171,000 in the third quarter of 2022 , an increase of 16.5 % from pre-pandemic levels in 2019 .
Speaking about the review Director of AECOM Ireland , John O ’ Regan said : “ 2022 represented an important step towards recovery for the construction sector as it was the first full year of activity since the COVID-19 pandemic however political , social , and economic shocks resulted in more unpredictability . The single biggest issue and subject of discussion and debate within the industry over the past 18 months has been in relation to energy , materials and labour costs inflation and their impact on tender prices . We are forecasting a 5 % increase in tender prices for this year which is a national average and will vary according to location , sector , scale , and complexity , amongst other factors .
“ Given everything that has happened over the past three years , we have come to expect the unexpected . However , one trend we can be certain of is the continued rise in prominence of environmental , social , and governance issues at home and across the world . Having transparent , externally validated , science based ESG targets is central to what we do at AECOM . However , investment in the multibillions will be needed to transition Ireland from fossil fuel dependence to renewable power and to ensure the current transmission infrastructure is upgraded significantly .”
AECOM ’ s Review comes weeks after the Climate Action Plan 2023 was published with specific industry targets and importantly includes sectoral emissions ceilings . The transport and built environment sectors will be required to make a significant contribution to achieving the overall target and CAP23 sets important milestones in the roadmap to achieving the same . It states core to the delivery of these targets will be joined up thinking from the sector and the Department , sufficient investment , an overhaul of planning legislation , and behaviour change across industry and society .
www . constructionviewonline . co . uk