Business

Buoyant building sector 'desperate' to see infrastructure windfall allocated

The construction industry in Northern Ireland is at its most buoyant for 18 months, a CEF/BDO report has revealed
Gary McDonald Business Editor

THE north's £3 billion construction sector is back in growth mode and showing 'caution optimism' - but could fall off a cliff again so long as Stormont remains paralysed.

And a leading industry figure insisted builders are "desperate to see movement" on allocation of the £400 million infrastructure windfall pledged as part of the DUP-Conservative post-election accord.

The latest biennial state-of-the-trade report from the Construction Employers' Federation and accountants BDO painted the most positive picture for the industry since the crash of 2007, with increasing house-building activity, significant university accommodation and hotels projects in place, more people being employed, and bulging order books.

But despite a bumper pipeline of work for local companies during the first six months of this year, that channel is "in grave danger of slowing" due to public sector contracts not materialising because they are tied to a functioning Northern Ireland Executive.

"It is crucial we see this money allocated soon, and the next six to 12-month period as absolutely critical for the wellbeing of our industry," CEF managing director John Armstrong cautioned.

"The lack of an Executive and a fully agreed budget have undoubtedly impacted on the tendering opportunities available in recent months.

"That is simply unacceptable, given that in reality there is a public sector capital budget there to be spent - and a budget that itself is growing year-on-year.

"Companies here want to push on. They want to get beyond the stability phase that many have been in during recent years. We can't afford to go backwards again.

"Growth opportunities are there in the private sector, with quarter-on-quarter increases in new housing starts and completions pointing to a house building sector which is beginning to once again play a full role in unlocking economic growth and opportunity.

"But the public sector makes up more than half of the overall workload for our industry in Northern Ireland, and potentially thousands of new jobs are just waiting to open, subject to the release of that £400m pot of infrastructure cash."

Besides the Stormont stalemate, other challenges facing construction include rising costs of labour and materials, skill shortages and uncertainty around Brexit, yet the sector has remained for the most part buoyant.

Brian Murphy, partner at BDO Northern Ireland, said: "This half-year survey is characterised by cautious realism, with most companies anticipating higher costs and squeezed margins.

“While the construction sector is battling higher input prices and limited public sector contracts, indicators point towards a quiet confidence and with good cause.

"Building work on new homes in the first quarter was up 16 per cent year-on-year, major plans are under way for new office and retail space and there remains that appetising prospect of a £400m capital investment over the next two years."

Construction in the north claims to leverage £2.84 for ever pound spent, which would potentially turn that £400m into a billion pound boost for an industry which turned over £2.7 billion in 2016 and which employs around 60,000 people.

Official calculations expect 9,200 new homes a year to be built in Northern Ireland, but the actual number of completions last year was only 6,466 units, according to Land & Property Services.

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