Construction industry growth expected

The Construction sector in Ireland has the potential to double in size over the short to medium term, according to CIF Director General, Tom Parlon.

Speaking at the CIF annual conference in Croke Park, in association with full service leading international law firm Maples and Calder, the industry has called on the Government to prioritise the sector in the budget and ensure that the gains made in construction are sustained.

The theme of the CIF Annual Conference is ‘Activity, Jobs and Solutions’.  Referring to a series of solutions that are designed to help the growth of the industry, Mr. Parlon said: “The construction industry was on life-support for over six years and now all the vital signs are going in the right direction. Activity levels are up and the value of construction output rose to €11billion in 2014 – a rise of over 14%. Government expenditure on capital investment is up, albeit still only about one third of what was spent in 2008. Planning permission figures are up for residential projects and the ongoing growth in Foreign Direct Investment (FDI) is helping to sustain high levels of commercial construction activity among building firms all over Ireland. Applications to the CAO for construction courses, engineering and architecture increased this year by up to 15%, and 45% of all jobs created in 2014 were in the construction sector.”

“The construction industry can double in size in the coming years, if the right decisions are made by Government and all stakeholders. The sector represents about 6.7% of GNP activity in 2014 and is a long way off the 12% level that most economic commentators, and the Government, believe the sector should have as its output. While the industry is supportive of the Government’s Public Capital Programme, there is a realisation in the construction industry that many of the projects listed have moved from previous plans to this one, while other projects are a long way from ever seeing a shovel in the ground. Investment in infrastructure kept many construction firms afloat, but now the industry needs to see more ambition from the Government in terms of a concrete timeframe for the delivery of the major infrastructural projects that the country is calling out for.”

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“The ESRI and the Government tell us that 25,000 new homes per year are needed, which is a long way from the 11,000 built in 2014, and the same amount expected this year. If output were to rise by another 10,000 homes, a further 25,000 construction jobs would be created. Therefore, measures are required to provide an adequate housing supply to meet demand and steps need to be taken to address the onerous regulation, the high local authority levies and contributions, and the endless delays in planning.

“The CIF has consistently warned that the new Central Bank rules for first time buyers render it next to impossible for some households to get on the property ladder. It is now clear that for some potential buyers, their rent is costing more than mortgage repayments would, yet the Central Bank rules make it impossible for them to buy. The Government has an opportunity to review these rules as they are clearly not working. In the context of the Budget, the CIF has outlined to Ministers Noonan and Howlin a series of real solutions such as a temporary VAT reduction and a Help to Buy scheme, which has had a positive impact in the UK.”

Dudley Solan, Partner and Head of the Commercial Litigation and Dispute Resolution Group in Maples and Calder’s Dublin office said, “Maples and Calder has one of the largest construction, projects and procurement teams in Ireland.  In the current upturn, we have found that clients are again focussing on building and we are increasingly advising on all forms of building contract, both private and public sector. We fully expect further growth into 2015, surpassing the 45% increase in 2014.  This is evidence of the industry’s pivotal position in the wider recovery and we are looking forward to continued progress over the next year.