Construction faces further Covid-19-fuelled decline, survey warns
Project viability, access to credit and limited cash-flow key blocks to building sector
More than half the professionals questioned for the Society of Chartered Surveyors Ireland/PwC Construction Monitor believe work will continue to decline over the next 12 months. Photograph: Chris Ratcliffe/Bloomberg
Covid-19 will continue to impact on building work in the Republic over the next year, property surveyors fear.
The pandemic reduced construction activity by 20 per cent in the first six months of the year, according to the latest Society of Chartered Surveyors Ireland (SCSI)/PwC Construction Monitor.
More than half the property professionals questioned for the study believe work will continue to decline over the next 12 months, while more than 66 per cent say their profits will decline.
Micheál Mahon, SCSI president, warned that the research indicated the Republic’s building industry faced a difficult year ahead.
He noted that those questioned for the market monitor were well-positioned to gauge likely construction activity over the coming six to 12 months.
“If they are not seeing positive activity levels now, this will translate to a challenging year in respect of residential and non-residential building activity,” Mr Mahon predicted.
He noted the vast majority of those who took part believed the pandemic would increase the difficulties that builders faced in raising cash to fund projects.
Participants highlighted projects’ viability, access to bank credit and cash-flow limits as the top three factors contributing to the difficulty in getting work financed.
“Furthermore, they identified financial constraints on consumers and clients as potentially having the biggest impact on building activity in the coming months,” Mr Mahon said.
Surveyors also said the need for building sites to have increased sanitation, and to provide workers with personal protective equipment and extra training, would add to costs.
Mr Mahon argued that there was a need to monitor delays in projects, which will also add to costs.
Surveyors were originally canvassed in February, before Covid-19 struck, when two-thirds of them expected to seen an increase in business in 2020.
They were questioned again in June, a point where they could assess virus’s impact on their industry.
Sinead Lew, a senior manager with PwC construction and real estate, said Covid-19 was likely to have worsened a skills shortage facing the building industry, as it could have prompted many overseas workers to return home.
In February, four out of five of the 300 surveyors questioned warned there were not enough skilled people in most building trades.
Meanwhile, just 9 per cent of study participants confirmed that they were ready for Brexit, despite the increased likelihood of the UK leaving the EU without a deal once the transition period ends on December 31st.
“Construction firms have no more time to wait and need to take action now to prepare to operate in a post-Brexit era,” Ms Lew urged.
She added that this should include dealing with customs and reviewing potential cash flow constraints.