Building sector outstrips growth across Europe

The Irish construction industry expanded almost 10% last year – Euroconstruct report

Growth will be driven by recovery in both residential (up 14 per cent to 2017) and nonresidential (up 12 per cent) construction, albeit from an exceptionally low base. Photograph: The Irish Times

Growth will be driven by recovery in both residential (up 14 per cent to 2017) and nonresidential (up 12 per cent) construction, albeit from an exceptionally low base. Photograph: The Irish Times

 

The Irish construction market is expected to record the strongest rate of growth across 19 European countries up to 2017, according to a new forecast.

The report reveals that Ireland, which represents less than 1 per cent of the total output among Euroconstruct members, showed the highest rate of growth across the region last year at 9.9 per cent.

Euroconstruct is a professional network of institutes in 19 countries that produces biannual publications covering the key construction sectors of civil engineering, residential and nonresidential construction.

The Euroconstruct report forecasts that after the most severe contraction in output across member countries, the Irish market is expected to continue to grow at the strongest rate with an average expansion of 10.6 per cent between 2014 to 2017.

Low base

Growth will be driven by recovery in both residential (up 14 per cent to 2017) and nonresidential (up 12 per cent) construction, albeit from an exceptionally low base. It is anticipated that new residential construction will aid recovery with new completions expected to reach 17,000 by 2017.

Overall construction volume growth across the 19 countries this year is forecast to be 1.9 per cent. European construction volume growth is then expected to accelerate in 2016 to 2.4 per cent) and 2017 to 2.6 per cent.

Euroconstruct remains upbeat on the UK. Volumes rose 7.1 per cent in 2014 and further growth of 5.7 per cent is expected this year. It is, however, more cautious about the prospects for Germany (up 0.9 per cent) and France (down 0.9 per cent).

Annette Hughes, director of DKM Economic Consultants and author of the Irish section of the Euroconstruct report, said: “Ireland is well positioned to perform strongly up to 2017, but there are a number of challenges for the sector which will need to be addressed to ensure it can meet the demands made on it over the coming years.

“These include access to finance, resolution of the mortgage arrears issue and planning regulations as well as ensuring the industry has the necessary skilled workforce to undertake the expected pipeline of work to the highest standards.”

A separate report indicates the value of construction projects that started in Ireland during the first quarter was down 20 per cent when compared with the same three-month period a year earlier.

The latest Building Information Index shows the value of construction activity fell by €333 million from €1.692 billion to €1.359 billion.

Five out of the seven sectors measured by the index showed a decline. The residential sector saw the most significant drop, falling by €174 million from €874 million in the first quarter of 2014 to €700 million for the same period this year. Education also suffered a decline of 68 per cent.

Increase

In contrast, there was a 54 per cent increase in the value of industrial construction projects started in the first three months of 2015, rising from €100 million for the first quarter in 2014 to €154 million for the same quarter this year.

 

Despite the decline in the value of projects getting under way, the value of construction applications for new projects jumped significantly during the period January to March.

The index shows a 42 per cent rise in the value of applications to €3.646 billion compared with 2014.