NuGen Properties

Northern Ireland construction output up 7.8%

Private construction is busy despite the vacuum at Stormont

According to a report from construction consultant Aecom, in the 12 months to 30th June 2023, total construction volume output in Northern Ireland was up by 7.8% year on year.

Growth was primarily driven by repair & maintenance work, which in 2023 saw a year-on-year increase of 17%. Infrastructure also had a significant increase of 9.3%, although this slowed to only 2.6% in the fourth quarter.

Tender price inflation in Northern Ireland rose 9% over the course of last year, which was lower than 2022’s figure of 12%. Overall material and labour costs are still rising but at a much slower rate than over the past two years and at a lower rate than general inflation within the wider economy. Aecom believes that while the type of projects and the composition in costs between labour and materials will change, tender price inflation will continue to ease over the course of 2024, to an average of 3.1%. 

However, a failure to reinstate a functioning government remains a barrier to growth with the political deadlock in Northern Ireland preventing key strategic decisions on the country’s infrastructure being made and slowing down the pipeline, Aecom says. 

Jody Wilkinson, Aecom’s Northern Ireland director, said ‘While there are signs in the wider UK economy that a slowdown is coming, Northern Ireland’s economy is more closely related to the Republic of Ireland which remains strong. The Northern Irish construction industry continues to adapt to change in supply chains, inflation and shifting demand between public and private sectors. It seems to be holding up, albeit with less optimism than last year. 

“Until such time as ministers are back to work at Stormont there will be stalemate in the public sector with the pipeline slowing and in some cases being paused, with no guarantee as to when political stability and leadership will return to provide investment and a clear direction of travel.

“It is possible that over the next 12 months Northern Ireland will see a two-tier industry emerge. In this scenario the public sector will remain relatively subdued until the government is in place to make investment decisions. Meanwhile, the higher growth, more independent private sector will benefit from foreign direct investment, particularly from the US.

“It is vital that this year brings renewed determination by industry and investors alike to seize on Northern Ireland’s decarbonisation potential. Northern Ireland was the last part of the UK to pass its own climate change legislation and as a result is decarbonising at a slower rate than the rest of the UK. With the long-awaited introduction of the Climate Change Act in 2022, energy transition policy for Northern Ireland is now in place. Time is of the essence as we have much catching up to do.”

Aecom’s annual review of Northern Ireland also shows that housing output remained strong in 2023, with an increase of 15.1%, mostly in public sector housing stock.

Aecom’s report corroborates the finding of a survey by the Northern Ireland Construction Employers Federation last month, which found that 75% of member firms were operating at full or almost full capacity and nearly half (45%) had increased turnover by at least 10% during the year.

Mark Spence, managing director of the Construction Employers Federation, said: “While the pattern of increased turnover remains, the reality for many contractors is that such growth is resulting in ever tighter profit margins due to the accumulated and continued effects of the inflationary pressures of the last three years. This, accompanied by a heavily constrained pipeline of new work locally, has resulted in many members expressing significant concern as to the favourability of the market into the New Year.

“The continued lack of an NI executive remains a key roadblock towards boosting the sector’s prospects and it is vital that the negotiations that were ongoing before Christmas are speedily revived and brought to a successful conclusion. However, it is also important that a return to devolved government is not just a re-run of what has gone before. Rather, it must mean a step-change in terms of delivery and, after many false dawns, result in a number of fundamental reforms which have long been set aside.”

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Dan Morten 18/01/22

Easy to work with, Jordan and the team were professional and were easy to communicate with.
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Di Hayes 20/08/22

NuGen Properties built an extension to the rear of my property, replacing the old conservatory. I am so pleased I chose this company. From the initial quotation, through the build and after they were professional, polite & well mannered. They kept the site tidy throughout the build and kept me informed of each stage as it happened. The work was finished to a good standard and I have had nothing but compliments on their work. I am already planning for them to come back and do some more work for me in a few months. I would 100% recommend them.

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