Construction ‘to grow by 15%’ in 2021 despite Covid and Brexit

Infrastructure consultancy Aecom says national infrastructure projects such as rail systems must go ahead

While 2021 has got off to a “bad start” for the construction industry, the Aecom report anticipates a “strong year” for the sector

While 2021 has got off to a “bad start” for the construction industry, the Aecom report anticipates a “strong year” for the sector

 

The Irish construction industry is expected to grow by 15 per cent in 2021 despite the challenges of the pandemic and Brexit-related delays, according to a new report by infrastructure consultancy firm Aecom.

In an annual construction industry review, to be published on Thursday, the group says that while construction output is unlikely to reach pre-Covid 19 levels, it is expected that development in 2021 will significantly exceed 2020 levels.

While 2021 has got off to a “bad start” for the industry, the report anticipates a “strong year” for the sector based on a presumption that normal activity will resume shortly as the vaccine rollout continues.

The report indicates that in general terms demand has not been impacted but rather activity has been delayed.

Last year Aecom estimated the cost of construction increased by about 1 per cent. In 2021, it is estimating “a conservative” further increase of 2 per cent.

On Brexit, the report suggests access to materials and other equipment has been unaffected to date.

Aecom Ireland director John O’Regan said on Tuesday the sector was better prepared than last year to deal with challenges.

“Despite the challenges associated with the dual impact of Covid-19 and Brexit, the projected growth rate of 15 per cent for 2021 highlights the industry’s resilience at the moment.

“While the first lockdown was very difficult, as an unanticipated event, the sector is now more prepared to effectively manage the associated challenges related to materials, cost and logistics.

“That being said, hospitality and retail has been put on hold, and while significant commercial office developments are proceeding on site, the uncertainty around the shape of the future office workplace will slow demand in this sector.”

Rail projects

Mr O’Regan said it would be important for the industry that promised rail projects such as the Dart expansion and Metrolink progressed as planned.

“Our report also suggests that while we are dealing with two very real threats to our supply chains, the price inflation for 2021 will only be marginally higher than 2020, reporting at 2 per cent.

“This is very positive news for the industry and for consumers as there was considerable anticipation that the cost of building would climb sharply in 2021.

“Looking ahead, our report highlights that a key element of promoting sustainable growth for the construction industry is ensuring that promised rail projects such as the Dart expansion and Metrolink progress as planned.

“While it may not seem a priority now we must double down on our commitment to rail development as it will enhance our work-life balance, support housing and development outside of our cities and go a long way towards our carbon emission targets.”

Mr O’Regan also called for the establishment of a national housing task force, consisting of industry and public sector players, which could “aid the fast and cost-effective delivery of housing across the country”.

“Along with the benefits of such a task force, the economic restart after the coronavirus means there is a chance to improve and speed up the planning and delivery process, which is delaying many pipeline projects.”