Optimistic for the forthcoming year is the general sentiment within the NI construction industry reveals new Construction Market Intelligence (CMI) from leading construction and property managing consultant in Northern Ireland, Rider Levett Bucknall (RLB UK).
Following the restoration of devolved government and agreement on a draft programme for government with a focus on growing a globally competitive and sustainable economy, the findings suggest a steady market for the year ahead.
With a noticeable increase in the number of bid opportunities across the public sector, particularly in the education sector, the infrastructure sector and repair and maintenance projects are expected to record the fastest rates of growth. The continuing need for infrastructure investment (water and sewerage systems) remains a concern and is impacting the delivery of new projects in Belfast. The Irish government’s commitment to spend £675 million on Shared Island investment priorities such as transport infrastructure has already begun to filter into Northern Ireland.
Planning approval timescales remain steady across local authorities. Investors and developers are mostly aware of the isolated planning issues that exist and remain positive about progressing their projects. The current planning system requires a number of policy changes to enable Northern Ireland to meet its renewable energy targets.
A ‘stable upward trend’ in tender prices is long-term forecast
Tender pricing has stabilised over the past quarter with a return to more typical increases in inflationary levels expected, at least in the short term.
As for the long-term outlook, a stable upward trend in prices is forecast but with some local spikes due to the chronic skills and labour shortages that exist in Northern Ireland.
- This quarter the impacts of movements in commodity prices on tender price levels have been generally in line with UK trends.
- Fit-out costs have noticeably increased in some sectors such as retail.
- The chronic skills shortage in the construction sector is continuing to have an adverse impact on labour availability and wages.
SECTOR FOCUS
Education
Education pipeline is increasing. The shared education campus at Ballycastle has been approved and will likely stimulate other developments. To tailor the procurement process, the Education Authority Framework for the Appointment of Integrated Consultant Teams for Above UK Procurement Threshold Construction Professional Services is to be released following extensive pre-consultation and workshops events.
Healthcare
While capital budgets have yet to be approved, the focus of the NHS continues to be on maintaining and retrofitting existing assets to ensure the operational stability of buildings.
Infrastructure
Preliminary works have commenced on the A5 North-West road link, a project supported by the Shared Island Fund to boost cross-border connectivity. Proposals for a long-term rail extension project across Ireland and Northern Ireland are gaining momentum with indicative routes shared for consultation.
Public and Civic
Budget cuts have been offset by news that £60m of Belfast Region City Deal investment has been unlocked with the signing of contracts for funding for three significant tourism projects, including Destination Royal Hillsborough.
Residential
Northern Ireland’s social housing funding pot has been reduced by 60% for this year. There is continued interest in purpose-built student accommodation development opportunities in Belfast.
Retail
The retail sector’s focus remains on refurbishment of existing assets, rather than new builds. As a result, we are seeing a spike in contractors’ fit-out costs. Out-of-town shopping centres remain an attractive option for investors following several high-profile transactions.
Sport
The redevelopment of Casement Park has not yet been approved with funding discussions ongoing. Investment has been secured for a number of Irish Football Association projects.
Noel Devine, RLB Partner in Northern Ireland comments, “The restoration of devolved government will boost development opportunities in Northern Ireland in the long term, with funding already committed to residential and infrastructure projects that will help to unlock economic growth.
“Collaboration between the public and private sectors will be crucial in addressing housing shortages and improving the social and economic outcomes from urban development. As the region strives to meet its net-zero carbon targets, we are likely to see a growing shift toward green building practices, adding to the pressure the construction industry is under to increase and upskill its workforce.”
Click here to read RLB’s full Construction Market Intelligence Q3 2024.