Business

North's construction sector continues to lag behind rest of UK

Construction growth in the north lagged behind the rest of the UK at the end of 2017 according to new research
Gareth McKeown

A RISE in housebuilding at the end of 2017 was one of the few bright spots as construction growth in the north lagged behind the rest of the UK according to new research.

The latest RICS (Royal Institution of Chartered Surveyors) and Tughans Northern Ireland Construction & Infrastructure Market Survey has revealed that overall construction workloads were broadly flat for the third quarter in a row at 6 per cent, significantly lower than the UK average (21 per cent) and lacklustre in comparison to other regions.

In terms of positives from the quarterly survey house building increased, while private sector and public-sector housing activity also rose in the three-month period up to the end of last year. However, the net balance of Northern Ireland respondents pointed to a fall in private industrial and public non-housing activity.

The outlook for construction and infrastructure activity in the north, whilst relatively upbeat, with the latter seeing growth for the first time in a year, remains the least optimistic in the UK, with only Scotland reporting lower expectations around employment prospects for the next 12 months. Local respondents were also not very optimistic about profit margins for the year ahead.

The lack of sufficiently skilled workers continues to be an issue for many construction businesses in Northern Ireland, particularly in professional services such as quantity surveying, demonstrated by a figure that was the second highest recorded for 10 years.

Some of those surveyed also suggested that the current exchange rate was leading some EU nationals to move elsewhere for work, while others pointed to the lack of a functioning Executive at Stormont as an impediment to investment.

RICS Northern Ireland construction spokesman, Jim Sammon, described the local construction sector as "something of a mixed picture".

“As the survey suggests, house-building activity in some areas continued to grow, and we are seeing good activity in areas such as hotel development," he said.

“But there is a divergence between greater Belfast and some other areas, and a divergence between subsectors. Some improvements in procurement processes are being made but the planning process remains unnecessarily difficult."

“Looking ahead, it is vital that the political situation in Northern Ireland is addressed to boost confidence and to ensure important decisions are being taken. A resolution to some of the key challenges associated with Brexit is also important," he added.

Construction partner at Tughans Solicitors, Tim Kinney said the small upturn in infrastructure workloads was one area of encouragement in an overall picture of limited growth.

“It is good news that private house-building activity and commercial activity has risen and those responses back up evidence of a spike in local construction recorded in the latest construction bulletin from the Northern Ireland Statistics and Research Agency - although it is coming from a low base."

 

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