RICS and Tughans Northern Ireland Construction & Infrastructure Market Survey, Q3 2017

Northern Ireland’s construction sector stagnated for a second successive quarter as a lack of public spending continued to impact on the industry, according to the latest RICS (Royal Institution of Chartered Surveyors) and Tughans Northern Ireland Construction & Infrastructure Market Survey.

Respondents cited the lack of a functioning Executive at Stormont as a key impediment to the sector, impacting on confidence, as well as the availability of funding for projects.

As a result, in the third quarter of the year, growth in the Northern Ireland construction sector lagged significantly behind the rest of the UK, which saw relatively steady growth, and all other UK regions, according to the survey.

Of all the sub-sectors, only the private housing and private commercial sectors were reported to have experienced growth in the quarter. Notably, Northern Ireland respondents reported that infrastructure workloads fell for the third quarter in succession.

Looking 12 months ahead, Northern Ireland surveyors also remain significantly less optimistic than their counterparts in the rest of the UK when it comes to expectations for workloads and profit margins.

Jim Sammon, RICS Northern Ireland Construction Spokesman, says: “Weakness in public sector activity has led to a stagnation in the local construction sector, with infrastructure, public housing and public-non-housing activity falling back. A lack of investment in infrastructure in Northern Ireland is a long-standing issue, but anecdotal evidence from chartered surveyors suggests the current political situation is a factor. However, there are a number of other factors impacting on the local construction as well, including uncertainty in relation to Brexit and challenges in the planning process.”

Tim Kinney, Construction Partner, Tughans Solicitors, says: “Whilst the overall picture is one of stagnation, it is encouraging to see that private house-building activity has continued to rise, contributing to housing supply as well as delivering important economic benefits. The rise in commercial activity is also encouraging and tallies with the crane count around Belfast. The construction sector remains crucial to the local economy in terms of employment, its supply chain, and the benefits it delivers to society, and government must play its role in creating an enabling environment so that essential investment, including in infrastructure, can happen.”

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

The headline workloads balance was 2% in Q3, indicating that workloads were broadly flat for the second quarter in a row. This was significantly below the UK average (+22%) and all other UK regions.

Private housing (+12%) and private commercial (+24%), of the various sub-sectors, were the only ones to record workload growth, however private housing had eased back for the second quarter in succession. The balance for both public housing and private industrial were -13%. The balance for infrastructure activity was -11%, indicating that infrastructure workloads fell for the third quarter running.

Looking ahead, Northern Ireland surveyors are the least optimistic in the UK. A net balance of +15% of Northern Ireland respondents believe workloads will be higher in 12 months’ time, compared to a UK average of +45%. Northern Ireland surveyors are also the least optimistic when it comes to expectations for profit margins.

44% of Northern Ireland respondents reported shortages of quantity surveyors.