Key Drivers of Growth in Irish Construction

  • May 29, 2024

Key Drivers of Growth in Irish Construction

The Irish construction sector is experiencing a strong resurgence, reaching levels of activity unseen in recent years. Driven by a combination of increased investment, favourable government policies, and growing demand for residential, commercial, and modern construction methods, the industry is set for sustained growth and transformation.

A Two-Year Peak in Construction Activity

April 2024 marked a significant milestone for the Irish construction industry. According to the BNP Paribas Construction Index, building activity has surged, recording its fastest expansion since March 2022. The seasonally adjusted index rose to 53.2 in April, up from 51.6 in March, signalling robust growth across various construction sectors.

This resurgence is not limited to a single area. Commercial construction has been particularly strong, buoyed by a rebound in the hotel market and a surge in residential projects. The number of new dwellings commenced in the first quarter of 2024 alone reached 11,956, more than double the number of completions. This trend highlights the sector’s dynamic capacity to meet rising demand.

Key Drivers of Growth

Several factors are driving this growth. The construction of apartments, the recovery in the hotel market, and a significant increase in investor interest in student accommodation have all played pivotal roles. Notable projects, such as the nearing completion of the Moxy Hotel in Cork, which will add over 200 rooms to the city’s inventory, exemplify this momentum.

Government Policies and Economic Environment

Government policies have also been crucial. Initiatives aimed at improving first-time buyers’ purchasing power and driving construction activity have had a positive impact, as evidenced by a 22% annual increase in residential unit commencements last year. This trend has continued into 2024, indicating a strong and sustained recovery.

The waiver of development contributions, initially scheduled to expire in April 2024 but extended due to high demand, has spurred a surge in new project commencements. This policy, coupled with favourable corporate tax environments and strategic location advantages, has cemented Ireland’s status as an attractive destination for construction investment.

Modern Methods of Construction: Ireland’s Path to Excellence

Another exciting development is Ireland’s emergence as a European centre of excellence for offsite and other Modern Methods of Construction (MMC). With a robust pipeline of projects and significant investment in facilities and training, the country’s MMC sector is set for rapid growth over the next five years.

Innovation and Efficiency in Construction

Irish manufacturers and project teams are leveraging their deep expertise and international experience to drive innovation in the construction industry. The adoption of MMC methodologies, such as 2D timber frame, light gauge steel (LGS), and precast concrete, is transforming the landscape, offering greater efficiency, quality control, and environmental sustainability.

The versatility and efficiency of these MMC methodologies are contributing to their success in the Irish construction landscape. For instance, 2D timber frame is primarily utilised in residential building, while LGS, particularly in 3D volumetric form, is seeing increased adoption across sectors such as healthcare, education, and residential construction.

Building Information Modelling (BIM) Integration

The successful integration of Building Information Modelling (BIM) in MMC processes has further enhanced efficiency and accuracy, aligning with MMC principles of waste reduction and cost efficiency. BIM allows for precise planning and real-time updates, reducing errors and ensuring projects stay on schedule and within budget.

Collaboration and Investment

The success of Ireland’s construction sector is underpinned by a collaborative approach between industry stakeholders and the government. This partnership has created a conducive environment for MMC adoption and growth, with a focus on building capacity, investing in skills, and addressing industry challenges.

Sector-Specific Developments

Residential Construction Starts are Rising 

Residential Construction

The residential sector has seen a significant uptick, with a total of 32,800 residential units commenced last year, representing a 22% annual increase. This growth has continued into 2024, with 12,000 units commenced in the first quarter alone. Government initiatives to support first-time buyers have played a crucial role in this expansion.

Commercial and Hotel Construction

Commercial construction, particularly in the hotel market, has also rebounded strongly. Deloitte’s annual Crane Survey reports that the construction of new hotels is driven by a rise in air-passenger arrival figures and record-breaking numbers of domestic trips. An estimated 1,650 new hotel rooms were opened in 2023, with a further 2,850 rooms under construction at the start of 2024 across Dublin, Cork, and Galway.

Student Accommodation

Investor interest in student accommodation has surged, contributing significantly to construction activity. This trend reflects the growing demand for quality housing solutions for students in major cities like Dublin and Cork. However, completions in 2024 are expected to be limited due to challenges in land availability and financing.

The Future of Irish Construction

Looking ahead, the Irish construction sector is well-positioned to capitalise on its current momentum. The continued focus on sustainable construction practices, the integration of cutting-edge technologies, and the ongoing collaboration between government and industry will ensure that Ireland remains a leader in the construction industry.

For construction professionals, this period represents a unique opportunity to be part of a thriving sector. At Necto Selection, we are dedicated to connecting talented individuals with the exciting opportunities that lie ahead. As we continue to build and expand, we invite you to join us in shaping the future of Irish construction.

Emerging Trends and Opportunities

  1. Sustainability and Green Building: With increasing emphasis on environmental sustainability, the construction sector is likely to see more green building projects. This shift will drive demand for professionals skilled in sustainable construction practices and technologies.
  2. Technological Advancements: The integration of advanced technologies such as AI, IoT, and robotics in construction processes will enhance efficiency and productivity. This trend presents opportunities for tech-savvy professionals to lead innovation in the industry.
  3. Skills Development and Training: To meet the growing demand for skilled workers, there will be a significant focus on education and training programmes. These initiatives will prepare the workforce for future challenges and opportunities in the construction sector.

Conclusion

The Irish construction sector’s recent growth surge marks the beginning of a new era of opportunity and innovation. From residential and commercial projects to the adoption of modern construction methods, the industry is poised for continued success. With strong support from government policies and a collaborative approach among industry stakeholders, the future looks bright for construction in Ireland. At Necto Selection, we are proud to play a role in this dynamic landscape, helping to connect top talent with the opportunities that this thriving market offers.

Supplementary Content and Further Reading

For more insights into the Irish construction sector and opportunities within, explore our other blog posts:

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If you are a construction professional seeking new opportunities or a company looking to find the best talent, contact us at Necto Selection. Let’s work together to shape the future of construction in Ireland.

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