Turner & Townsend’s latest market intelligence report reveals Ireland’s construction industry is maintaining stability despite significant operational challenges, with the sector operating at 77% capacity amid strong demand across housing, infrastructure, and other sectors.
The Q3 2024 report highlights a complex market landscape where, despite robust demand, only 11.1% of respondents perceive the market as warming, while 77.8% indicate stability. The housing sector has emerged as the top performer, with private sector housing delivery now outpacing public sector development.
Market Dynamics and Key Challenges
The industry continues to face substantial headwinds, with skilled labour shortages remaining the primary concern among contractors. This workforce challenge has contributed to a 5% increase in construction labour costs over the past quarter. Additionally, materials costs have seen significant increases, particularly in concrete prices, which experienced a notable 9% inflation compared to the industry average of 4%.
Programme delivery has been impacted, with 66% of respondents reporting increased project timelines. “There is some evidence of bottlenecks in the planning process, impacting on future projects,” notes one industry respondent. These delays are primarily attributed to:
- Difficulty accessing skilled labour
- Fixed price issues with suppliers
- Material availability challenges
Future Outlook and Order Books
Looking ahead, the report forecasts tender price inflation of:
- 3.3% for 2024
- 3.6% for 2025
- 2.8% for 2026
- 2.7% for 2027
Contractor order books indicate a strong near-term pipeline, with:
- 76% capacity for 2024-2025
- 44% for 2025-2026
- 14% for 2026-2027
Sustainability Challenges
The report highlights significant gaps in the industry’s sustainability journey. A striking 94% of contractors report not having embodied carbon assessments on at least half of their projects. However, there are positive signs in the retrofit sector, with energy efficiency projects accounting for:
- 25% focusing on insulation installation
- 23% dedicated to window installations
Workforce Development and Policy
The recently approved Sectoral Employment Order provides a framework for future labour costs, mandating wage increases of 3.4% in August 2025 and 3.2% in August 2026. Industry stakeholders are calling for increased government support to address the skills shortage, with recommendations including:
- Enhanced apprenticeship programs
- Incentives for school leavers to pursue construction careers
- Programs to attract skilled workers from abroad
- Improved support for skills training and development
“The next round of agreement with the SEO [Sectoral Employment Order] will be key to keeping control on construction costs,” states one contractor in the report.
Regional Performance
The all building and construction volume index showed mixed performance in Q2 2024, with:
- 1.7% increase quarter-on-quarter
- 1.5% decrease year-on-year
- Non-residential building sector growing 5.3% quarterly
- Residential building sector showing strongest annual growth at 8.1%
“Currently there are a lot of public tenders in the market, but the upcoming election may have a bearing here,” notes an industry respondent, highlighting the potential impact of political uncertainty on the sector.
