Construction output to drop by 3%

THE output of the Irish construction industry is due to decline by 3% in 2013, following a 9% fall last year. That’s according to Davis Langdon – an AECOM company – in its annual review.
Andrew Thompson, who heads up Davis Langdon’s Limerick office, said the 2013 outlook represents relatively good news in terms of curbing the industry’s downward spiral.
“Whilst good news like this is welcome, it is not having an immediate effect on the market. Contractors, in particular, are feeling the pressure more so than others, as they rely upon live construction projects.
“In this regard, we have noted that contractors are being a lot more selective about what they tender for due to a lack of resources and high tendering costs.”
One of the areas examined by the Davis Langdon annual review is the housing market and Mr Thompson said statistics indicate there were 4,000 housing starts and 8,000 completions during 2012 – less than one-tenth of the annual total at the peak of the market.
“The majority of residential activity is in the one-off house category and the public-sector housing capital spend is minimal in the Mid-West Region and is largely restricted to repairs, maintenance and improvement of existing stock across the local authorities,” he said.
The Government construction stimulus package does include a number of projects in the Mid-Western Region, including primary care centres in Ennis, Clonmel and Limerick City. The plan also includes a new criminal courthouse for Limerick.
Looking at the medium term, Mr Thompson said even with a strong recovery in the Irish construction industry, it is highly unlikely to return to the wholly unsustainable levels of the mid-2000s.
In this context, Mr Thompson said Davis Langdon believes an industry that accounts for 10-12% of GNP or 8-10% of GDP would be a relatively sustainable one.
“Even if the Irish construction industry grew by an average 10% per annum over the next number of years, it would be 2023 – 10 years from now – before we would reach the 12% of GNP mark.”
So with average 10% annual growth, it will be 2023 before industry becomes sustainable, he maintained.