As we delve into the Irish construction sector's forecast for 2024, a mix of challenges and opportunities becomes evident. With insights from Mitchell McDermott's January 2024 Construction Industry Infocards, we can paint a comprehensive picture of the current state and future prospects of the industry.
The housing sector, a critical area of concern for many, reveals a complex landscape. According to Mitchell McDermott, over 20,000 housing units in Strategic Housing Developments (SHDs) are stuck in a logjam at An Bord Pleanála, with another 8,000 units delayed due to Judicial Reviews. This bottleneck represents almost a year's supply of housing, with planning decisions an average of 16 months late as of the end of 2023. The financial toll of these delays is significant, costing an estimated €125 million, ultimately borne by consumers.
Contrastingly, there's a brighter side: 98% of Large-scale Residential Developments have been decided on time, with no outstanding Judicial Reviews by the end of 2023. Furthermore, 31,000 SHD units have received planning permission but are yet to start construction.
In response to these challenges, Mitchell McDermott has called for urgent action, including the recruitment of planners, drafting a funding plan to address a looming multi-billion-euro finance gap, and the recruitment of 5,000 construction workers annually over the next decade.
A positive note in the report is the stabilization of construction costs, which rose by just 2% in 2023 — the lowest rate of increase since Mitchell McDermott began tracking in 2016. An inflation increase of 2 to 4% is forecasted for 2024, indicating a more predictable environment for project planning and execution.
The hotel sector continues to thrive, with 2,530 keys added in Dublin in 2023, indicating sustained demand and growth prospects. This growth is expected to continue in the coming years, showcasing the sector's resilience and potential for investment.
The apartment sector is seeing a steady demand, with 50,000 planning permissions granted, including 43,000 for housing and 39,000 for apartments, underscoring a slow but steady recovery in residential construction.
Student accommodation also shows promise, with the Higher Education Authority estimating a need for 75,640 student beds by 2024. Although challenging due to construction inflation, the market is expected to deliver 54,000 units by 2027, meeting a significant portion of the demand.
The office sector in Ireland continues to face significant challenges, with no real immediate signs of recovery on the horizon. The ongoing shift towards remote and flexible working arrangements, accelerated by the global pandemic, has fundamentally altered demand for traditional office spaces. Many companies are re-evaluating their need for physical office space, leading to increased vacancy rates and a cautious approach to new developments. This sector's struggles reflect broader changes in how and where people work, signalling a need for innovation and adaptation in the design and use of office environments.
Government supports have been instrumental in ensuring the continuation of between 10,000 to 15,000 units last year. This intervention highlights the critical role of policy in sustaining the construction industry during uncertain times.
As we look towards 2024, the Irish construction sector is at a crossroads. While challenges remain, particularly in the housing sector, there are also significant opportunities for growth and investment in areas like hotels and student accommodation. With the right strategies, including increased planning efficiency and workforce development, Ireland's construction industry can continue to thrive in the years to come.
For a detailed insight into the sector's performance and prospects, referencing Mitchell McDermott's comprehensive analysis alongside the latest industry data provides a solid foundation for understanding the dynamics shaping Ireland's construction landscape in 2024 and beyond.
If you’re looking for a new job in Ireland’s construction industry in 2024, get in touch with our Ireland team at SSA Recruitment and we’d be delighted to have a chat about the current opportunities in the sector.
