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Northern Ireland Construction Market Faces Cold Front

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Northern Ireland Construction Market Faces Cold Front

Northern Ireland Construction Market Faces Cold Front
November 01
10:36 2019

Political instability caused by a lack of a local Executive and Brexit uncertainty pose the greatest challenge to contractors in Northern Ireland, according to a recent Northern Ireland market intelligence report. In the latest Northern Ireland Market Intelligence Survey, just over half of contractors in the market describe current tendering conditions as ‘cold’, with strong competition and tight margins dampening confidence. The analysis finds 78 percent of contractors predict market conditions to stay the same, with just under a quarter predicting a further cooling in the months to come.

Against a backdrop of political instability, delayed approvals, weakened pipeline and muted investor confidence, tender price inflation is expected to increase from 1.7 percent this year to 2.3 percent in 2020 – driven predominantly by a deepening and ongoing industry skills crisis.

The survey highlights that total construction output in Northern Ireland decreased by 4.1 percent in the first quarter of this year. The private commercial sector has also replaced the public sector and housing as the top performing area in the market, according to respondents.

Order books for contractors in Northern Ireland have improved in the first half of 2019 when compared to previous years, but capacity still remains. The order books are on average 80.0 percent full for 2019/20, and currently stand at 64 percent for 2020/21.

Colm Lavery, Director, Real Estate and Strategic Lead at Turner & Townsend, commented: “It has been a whirlwind year of uncertainty with the ‘are we, aren’t we’ approach to leaving the European Union, combined with Stormont failing to return from dissolution, weighing heavily on the minds of contractors. They have also been feeling the effects as tendering conditions cool and construction output falls.

“The looming departure from the EU and low investor confidence remain key hurdles to the Northern Ireland market. Short-term outlook is understandably pessimistic. With some commentators talking of a recession, it may require a general election to provide the impetus needed to re-establish political certainty and restore confidence that the industry will improve.”

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