Construction sector set for major workload boost in 2017

Challenges for local firms remain in terms of skills and price inflation
Challenges for local firms remain in terms of skills and price inflation
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Confidence in the 12-month outlook for Northern Ireland’s subdued construction sector is at its highest in more than two years according to the latest Northern Ireland Construction Market Survey.

Produced by the Royal Institution of Chartered Surveyors (RICS) and solicitors Tughans, the survey covers the final quarter Q4 of 2016 and paints a rosier picture that at any time since the end of 2014.

Northern Ireland was one of the only areas of the UK to see a pick-up in the pace of output growth - a net balance of 27% - in the final quarter of 2016 and the significant majority of respondents - a net balance of +83% - expect workloads to rise during the course of this year.

Housebuilding remains a key source of workload growth for Northern Ireland construction surveyors, with private housebuilding activity rising particularly strongly (a net balance of +48%). Private Commercial activity was also rising firmly (+36%), according to the survey.

In contrast however, infrastructure workload growth remained weak (+5%), and significantly below the UK average (+18%).

Labour shortages and rising costs are also an increasing concern for the sector.

The proportion of Northern Ireland respondents reporting skills shortages rose across each area, with 57% reporting a lack of quantity surveyors, while 47% cited a shortage of bricklayers.

Another issue, as in other sectors, is a rise in input costs, the survey reports.

“The picture painted by the Q4 survey is one of growth, and expectations looking 12-months ahead have improved considerably, probably driven by rising activity in Belfast, where a significant number of hotel, office, and student accommodation projects have come on site,” said RICS construction spokesman for Northern Ireland, Jim Sammon.

“Local companies are also continuing to do a significant amount of work in GB, and increasingly Dublin, where the market is buoyant and appears sustainably so.

“However, challenges for local firms remain in terms of skills and price inflation, and a number of respondents are also citing delays in planning as holding back investment. We also need to see more broad-based activity beyond Belfast into other parts of Northern Ireland.

“The lack of growth in infrastructure workloads remains a key concern. Infrastructure investment from both the private and public sectors, is essential to delivering long term growth, particularly as we seek to continue to attract Foreign Direct Investment.”

Michael McCord, construction partner with Tughans said: “The Q4 survey is another indicator of increased sentiment in the Northern Ireland business community, and it is encouraging that surveyors expect workloads to rise this year.

“Clearly some uncertainty lies ahead, and rising input costs may impact on profitability, but a weak sterling also has the potential to help increase the competitiveness of Northern Ireland companies working in the Eurozone.”