Decline In Construction Industry Starts To Slow

2011 will see the construction industry continue to decline, albeit at a slower rate than the last two years with the public sector providing the lion’s share of investment as the domestic environment remains relatively poor for private investors according to Davis Langdon, one of Ireland's leading construction consultancy firms.

Davis Langdon is an AECOM company one of the leading global providers of planning, design, engineering and cost management services.

In its Annual Review of the construction industry, Davis Langdon foresees the industry continuing to fall in 2011, with overall output expected to be in the region of €8.9 billion (from a high of €38 billion in 2007), to be followed by €8.5 billion in 2012 and thereafter a couple of years at close to zero growth.

Davis Langdon recently celebrated its 150th year in business and Director, Paul Mitchell, says this will leave the industry output well below the figure of €18 billion, identified by the Construction Industry Council in 2009 as the long term sustainable level or the 12-15% of GNP identified by DKM Economic Consultants as a sustainable level of output.


"With the residential sector having reduced from a wholly unsustainable 65.9% in 2006 to 20.8% in 2011, the public sector has seen its share increase from 21% to 73% despite having been reduced from €6 billion to €4.5 billion.

"We anticipate that in the short to medium term those sectors experiencing oversupply following the Celtic Tiger boom such as residential, retail and tourism will remain in sharp decline whereas the public sector and the industry and infrastructure sectors will decline at a slower rate to that experienced in 2010.

"However, these enforced adjustments have lead to a significant improvement in the value-for-money available and the combined offering of significantly reduced capital costs and moderated pay expectations has greatly improved sectoral competitiveness," Mr Mitchell continued.

Paul Mitchell pointed out that "it is imperative as individual companies and an industry as a whole that we maximise the opportunities in 'selling' our services and skills in improving international economies. Several companies have been successful in winning work overseas and this can help sustain some of the valuable jobs and skill base which have been created over the last decade.

"In line with the view expressed in last year's Annual Review, Davis Langdon believes it will most likely be the end of 2011 or even early 2012 before we see all loans transferred to Nama. This estimate clearly depends on what the coalition parties negotiate with the EU in relation to the bailout. Outflow of construction activity from Nama is not so much dependent on Nama's work rate or success but demand in the market place. Where frustration builds up is when the demand exists but the funds are held up in the application and approvals process."

(CD/KMcA)