RICS and Tughans Northern Ireland Construction & Infrastructure Market Survey, Q4 2017

 

A rise in house-building was one of the main bright-spots as overall construction workloads edged upwards in the final quarter of 2017 (Q4 2017), according to the quarterly RICS (Royal Institution of Chartered Surveyors) and Tughans Northern Ireland Construction & Infrastructure Market Survey.

 

Both private sector and public-sector housing activity increased in the three-month period, according to the net balance of Northern Ireland respondents, while there was also an uptick in the data regarding both private commercial and infrastructure activity.

 

However, the net balance of Northern Ireland respondents pointed to a fall in private industrial and public non-housing activity.

 

As a result, the overall workload balance at +6 percent lagged behind all other UK regions and suggests that overall growth in the Northern Ireland construction and infrastructure sectors was lacklustre in Q4.

 

The outlook for construction and infrastructure activity in Northern Ireland, whilst relatively upbeat, also lags behind other UK regions. Indeed, only respondents in Scotland had lower expectations around employment prospects than those in Northern Ireland for the next 12 months and few were optimistic about profit margins for the same period.

 

The lack of sufficiently skilled workers appears to be an obstacle for many construction businesses here, particularly with regard to professional services such as quantity surveying, demonstrated by a figure that was the second highest recorded for 10 years.

 

Anecdotally, some respondents suggested that the current exchange rate was leading some EU nationals to move elsewhere for work. A number of respondents pointed to the lack of a functioning Executive at Stormont as an impediment to investment.

 

Jim Sammon, RICS Northern Ireland Construction Spokesman, says: “It would perhaps be fair to say that the construction sector in Northern Ireland is 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.

 

“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.”

 

Tim Kinney, Construction Partner, Tughans Solicitors, said: “It is encouraging to see even a small upturn in infrastructure workloads, although the overall picture is one 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.

 

“It is also encouraging to look around and see significant projects underway including large city centre hotel developments but if we don’t have a functioning local Executive this will mean that important decisions aren’t being made, impacting on the ability to make investment happen.”

 

The key Northern Ireland findings of the latest survey are as follows:

 

• The headline workloads balance was 6% in Q4 indicating that workloads were broadly flat for the third quarter in a row. This was significantly below the UK average (+21%) and all other UK regions.

 

• The highest net balances in the subsectors were seen in private housing (+17%) and private commercial (+14%) while growth was seen in the infrastructure sector for the first time in a year (+11%). A small amount of growth was reported in public housing (+6%) but the net balance of respondents reported that the private industrial sector had seen no growth for almost two years (-11%) while public non-housing respondents have not reported growth for one year (-11% in Q4 of 2017)

 

• Looking ahead, Northern Ireland surveyors remain the least optimistic in the UK. A net balance of +33% of Northern Ireland respondents believe workloads will be higher in 12 months’ time compared to a UK average of +48%.

 

• Only respondents in Scotland (+11%) had lower expectations around employment than those in Northern Ireland (+24%) and a balance of only +10% were optimistic about profit margins.

 

• Following a similar trend to the rest of the UK a balance of +62% of Northern Ireland respondents reported a shortage of quantity surveyors, a figure that was the second highest recorded in 10 years.

 

• The highest levels of respondents in 13 years (+49%) reported a shortage in blue collar workers and a balance of (+47%) of respondents reported a shortage of other construction workers.