In 2019, the Irish construction sector had a strong performance in sectors such as residential, medical, education and commercial. As our research reveals, overall in 2019, in excess of €7.86 billion of construction projects commenced construction, which is a 15% decline on 2018, when the equivalent value was €9.2 billion. There was also a 4% decline in the overall volume of projects starting in the same period. Projects approved to proceed however showed a 17% increase on 2018, which in value terms, represents in excess of €13 billion, however, the volume of projects was down 5% on 2018.
According to our research, in excess of 1,137 sites (excluding self-build construction) closed following the Irish Government lockdown order in March 2020. The subsequent lifting of these restrictions on May 18, allowed sites that were Covid-19 compliant to recommence construction activity. This saw an initial surge in site openings, but this tapered off somewhat in the following weeks, as contractors and workers continued to adapt to new operating processes.
PLANNING ACTIVITY 2020
The average number of ROI applications lodged up to March 14, was 490 per week (pw), during the Covid-19 lockdown they dropped to 455pw (-7%) and from May 18, the average has risen to 602pw (+32%).
In NI, the drop was more significant with a -42% fall in submissions to 110pw and only reverted to pre lockdown levels of 189pw from June 6. It should be noted the return to activity in NI was and remains behind the Republic. Planning decisions for ROI fell by -44% to 228pw during the Covid-19 lockdown period when compared to the first 11 weeks of the year, when they averaged 410pw.
The volume of decisions has recovered by +4% on the pre-Covid period to 426pw, which indicates – based on the volume of planning applications submitted – that a backlog in planning decisions of around 1,500 is still being worked through. The situation for NI reveals a -64% falloff in planning decisions to 55pw during the Covid-19 cessation and is still -27% behind the pre Covid period.
In terms of Public Sector Construction Tenders, both ROI and NI witnessed a significant drop in advertised tenders. This resulted in many existing tenders having their deadline dates extended over the lockdown period.
According to CIS research, there has been a marked decline in activity across all sectors and regions for both pipeline (granted) planning and project commencements, with the only exception being in the hospitality sector.
In analysis of the non-residential sectors, Q2 is down -29% for the planning pipeline and down -30% for project starts compared to Q1 2020. Also, in terms of residential, the number of units granted permission in Q2 was 8,088 compared to 15,148 in Q1 of this year and for residential starts, 5,483 units commenced in Q2 versus 6,127 units in Q1.
Finally, the challenges presented by Covid-19 have resulted in projects being delayed or cancelled across all sectors, in addition to the disruptions caused in the supply chain relating to materials, labour, equipment, etc. It is difficult to predict what activity levels are likely to be for Q3 and Q4 at this stage, but the trajectory for both applications and decisions do look positive and as the industry adapts to a “new norm” and the promised support from Government, the industry will hopefully bounce back to pre-Covid levels.
To download the full CIS Q2 2020 report visit www.cisireland.com.