Monday 26 September 2016

Volume of construction to increase for the third year in a row

Published 21/10/2015 | 02:30

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THIS year is shaping up to be the third year in a row in which both the value and volume of construction in Ireland has increased.

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According to the latest figures from the Central Statistics Office, the first half of 2015 has proven to be a good one for the industry.

The three months to the end of June (Q2) experienced an 8.5pc jump in the value of construction when compared with the same period last year while it also saw a 7.2pc rise in the volume of construction across the nation.

The positive trend for the industry has carried across into planning permissions as well. In the second quarter of this year there was 4,038 planning permissions granted across all sectors, including residential and commercial.

Residential planning permission rose in Q2 also. There were 3,010 planning applications for dwelling units granted in the period that saw just 1,606 units granted last year.

While the figures are showing progress they are still some distance off the pre-crisis highs of 2006.

The president of the Society of Chartered Surveyors Ireland, Andrew Nugent, said the figures are positive but no one is suggesting the country should go back to the amount of construction occurring before the crash.

"They are positive. Confidence is certainly improving out there in the market but I suppose it needs to be borne in mind that we are coming off a very low base, being the collapse of the construction industry after the boom years." Mr Nugent said in terms of output in the construction sector, it is operating in or around a third of where it was before.

"Nobody is advocating going back to the levels we were at in the boom years where the construction industry was effectively supporting the economy rather than the other way around."

Currently Ireland is operating at below what the European Commission deem as sustainable in construction.

"Certainly from our analysis of the construction industry in other developed economies across Europe, the output of the construction industry would be somewhere around 12pc of GDP.

"At the moment we're operating somewhere around 7pc or 8pc of GDP. So we're still under what would be termed by the EC as a sustainable construction industry," Mr Nugent said.

The CSO figures revealed that there has been a surge in planning permission for apartments. Quarter 2 of 2015 experienced a 227.2pc rise in the number of planning permission applications granted for apartments when compared with Q2 of 2014. This contrasts to houses which saw a 76.7pc increase in granted applications.

Office space has proven to be an issue for many companies in urban areas and Mr Nugent said the commercial sector has seen an improvement since 2014.

"Activity in the commercial space would have picked up significantly through 2014 and 2015 as the supply of commercial office space has reduced dramatically. It has encouraged more entrances into the market so we are finally seeing new commercial accommodation."

Residential construction has seen gradual increases according to the CSO figures but Mr Nugent said that the sector is not keeping pace with the commercial sector.

"The other sector that is lagging behind demand is obviously housing where we're only producing a third of the houses needed. All the economic bodies are indicating demand for housing of 20 to 25,000 we built 7,000 this year," he said.

Irish Independent

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