A rebound in the Irish construction market is being forecast to lead to continued growth in the period up to 2019, after a very difficult few years for the country in the wake of the global economic crisis.
A report from Timetric, a provider of online data and analysis, is predicting an optimistic outlook for the Irish construction industry. It said that in real terms, the industry’s 2010 to 2014 output value recorded a compound annual growth rate (CAGR) of -2.5%.
It claimed that factors such as weak business confidence and consumer demand, high unemployment and a large budget deficit, lessened demand for construction during the past five years.
In its report, Construction in Ireland – Key Trends & Opportunities to 2019, Timetric predicted that the industry’s output would grow over the forecast period at a CAGR of 5.8% in real terms.
It said that output would pick up from a total of US$15.7 billion (€14.02 billion) in 2014 to reach US$20.8 billion (€18.57 billion) in 2019.
The company said this growth would be supported by growing investment in social housing, new commercial and infrastructure projects, as well as improving consumer and investor confidence as regional and global economic conditions picked up.
The report found that residential construction had been the largest segment in the Irish construction industry during the review period, accounting for nearly 40% of the industry’s total value in 2014. It said the market was expected to follow a similar trend over the next four years.
The country’s growing population and decreasing unemployment, along with a government strategy to improve the supply of social housing, will back the market, it said.
Commercial construction was the second largest segment. Timetric said it recorded negative growth rates during the review period as a result of stagnant levels of economic activity.
Over the next few years, growth is expected to return, however, driven by positive developments in domestic and regional economic conditions, and investment in office and retail buildings, combined with an increase in disposable income and also by the prosperous tourism sector.
Timetric said that in order to meet the demand generated from the process of urbanisation, the country’s transport infrastructure system needed a huge amount of investment.
As a result, in its 2015 budget, the government increased its capital expenditure on infrastructure development by 6.3%, from €3.3 billion in 2014 to €3.5 billion in 2015 – investment that Timetric said would support the infrastructure market over the forecast period.