The value of construction projects commenced saw a significant increase in the first three quarters of 2015, rising by €1.7 billion to €4.25 billion when compared to the same period in 2014 according to the latest edition of the Building Information Index.
This represents an increase of +67% in the value of actual construction activity for the first nine months of 2015 when compared to the first half of 2014.
The Building Information Index is produced by a team of researchers at Building Information Ireland who examine the various phases on every construction project using up to date planning and detailed project information. Project Commencements, which are projects that have actually commenced and are on site, are a real-time barometer of what construction activity is happening throughout Ireland. Project Applications can measure the sentiment in the sector and are indicative about future construction projects in the medium to long term.
Increase of +67% in the value of Project Commencements
“The Building Information Index shows that the value of commenced construction projects increased by €1.7 billion to €4.25 billion in the first nine months of 2015 from €2.55 billion for the same period in 2014. The Building Information Index shows that when these figures for the value of Project Commencements are broken down for each region, the recovery in the construction sector is being felt across the whole of Ireland. Munster has recorded the largest increase with gains of +126%, while Dublin +74%, Leinster +39% and Connacht/Ulster +32% also performed very strongly,” said Danny O’Shea Managing Director of Building Information Ireland.
“When we analyse Project Commencements in the first nine months of 2015 in each the seven sectors that the Building Information Index compiles data for, Commercial and Retail continued to be the strongest performing sector at €830 million which represented an increase of +99% when compared to the same period in 2014. Also experiencing a +99% rise was the Industrial sector, with a rise to €482 million. In a sign of growing confidence in the Residential sector, commencements almost doubled with a rise of +98% to a value of €2.09 billion.”
“Projects funded exclusively by the exchequer in areas such as Education, show a continued drop in project commencements with a fall of -7% to €211 million. This is also mirrored in the Social sector with a drop of -12% to €196 million. Private sector investment in Agriculture has seen a +33% rise to €84 million and projects in the Medical sector also rose by +12% to €354 million,” continued Danny O’Shea Managing Director of Building Information Ireland.
Project Applications up +26%
Project Applications, which measures the value of construction projects that have applied for planning permission, are also up by +26% to €11.27 billion in the first nine months of 2015 from €9 billion for the same period in 2014.
In terms of Project Applications, the Building Information Index shows that while overall the value of projects is up 26% for the first nine months of the year, there are significant regional variations throughout the country. Dublin (€5.38 billion) is the region with the highest value of new Project Applications and it also is the region that has seen the largest increase, with a 40% jump. Leinster (€2.77 billion) sees an increase of +30% and Connacht / Ulster (€1.24 billion) is also up significantly by +27% over the same period last year. Munster still continues to show a marginal decline of -5% in the value of new Applications (€1.88 billion).
Private sector driving construction recovery as public investment dries to a trickle
According to Danny O’Shea, “The data in the Building Information Index clearly shows that the private sector is driving growth in the construction industry. Approximately €11.27 billion worth of construction projects, across every sector, applied for planning permission in the first nine months of the year. The breakdown of this however, into funding source, clearly shows that only 11% or €1.23 billion of the value of these projects relate to public funding. A total of €10.04 billion or 89% of the projects are privately funded, which is a figure that many in the industry will find surprising. It is important to note that this 89% figure does not include small residential extensions, one-off homes and other minor works and is therefore a conservatively low figure.”
Project with a total of 11,795 residential units commence construction in first 9 months of 2015
Residential Construction remains a weather vain for the construction sector and the statistics contained in the Building Information Index all point in the one direction. Residential projects that have commenced construction in the first nine months of 2015 are up +98% from the previous year. When complete, these entire projects would yield a total of 11,795 individual housing units, with a construction value of approximately €2.09 billion. The better news however is to be found in the volume of residential projects that have submitted a planning application. This figure continues to rise, indicating a strong pipe-line of potential residential projects and is up +29% on last year. A total of 27,750 residential units would be built if all of these projects proceed through the planning process, representing a construction value of approximately €5.58 billion.
Average number of weeks from Application to Commencement
The Building Information Index shows that the average number of weeks it takes for a construction project to get from the planning application stage to work starting on site was 71 weeks as of end of third quarter in 2015.
Construction projects in the Residential sector continue to be the slowest to get through this process, taking on average 132 weeks, which is an improvement from the previous Building Information Index. The best sectors for speed from application to commencement were Education (49 weeks), followed by Industrial (52 weeks) and Agriculture (53 weeks).
Danny O’Shea said, “The first nine months of 2015 has seen a marginal fall in the average number of weeks it takes for a construction project to get from planning application to work commencing on site when compared with the earlier quarters of 2015. The decreasing length of time taken for many projects to move from application to work on site is a sign of modest improvements in the sentiment in the construction industry.”
The Building Information Index contains the most comprehensive Construction Activity Database in Ireland with real-time information on planned and current construction projects in Ireland and is produced by a team of researchers at Building Information Ireland.
The Building Information Index provides a quarterly breakdown of the actual monetary value of construction projects in the Irish construction industry broken down by region, funding source and sectors; Residential, Commercial & Retail, Medical, Education, Agriculture, Industrial and Social.