Construction sector activity slows for fourth month

November 14, 2023

Activity in the construction sector in Ireland slowed further last month.

It is the fourth month in a row that activity has fallen.

According to the BNP Paribas Real Estate Ireland Construction Total Activity Index, the pace of decline was solid and faster than that seen in September.

A further reduction in activity on housing projects was apparent from the results.

“The slowdown in residential activity during October seems surprising given the continued growth in housing commencements and completions this year,” said John McCartney, Director & Head of Research at BNP Paribas Real Estate Ireland.

“But the explanation is simple – completions have been rising faster than commencements in recent months, causing the number of units under construction to edge lower.”

However, commercial activity returned to growth albeit marginally, ending a three-month sequence of decline.

“The expansion in commercial activity might also seem surprising as there has been little large-scale retail development and as the office market is already oversupplied,” said Mr McCartney.

“Again, however, the explanation is straightforward. Over 26,000 sq m of Dublin office space that was earmarked for completion in Q3 got delayed until Q4.”

“With a further 75,000 sq m already scheduled for Q4 delivery, there is now a strong push to get projects completed by year-end.”

The index found employment did expand again during the month, at a rate faster than the previous month.

Companies also remained optimistic for the coming year amid hopes that new projects would be secured.

However, sentiment dropped sharply bringing it to the lowest level since November last year.

“The medium term outlook for residential and commercial construction is quite contrasting,” Mr McCartney said.

“Over 18,000 new dwellings are currently underway in Dublin alone, and 2024 should be another strong year for housing delivery.”

“However, speculative office starts have dried-up in response to market signals, and the supply pipeline falls away sharply from next year.”

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