Political challenges continue to impact NI’s suffering construction sector
Local construction activity continued to fall amidst a lack of publicly-funded building work in Northern Ireland during the first quarter of 2019, according to the latest RICS and Tughans Construction and Infrastructure Market Survey.
However, the one sector that stood out from a positive perspective was private sector house building, with a net balance of 29 percent of Northern Ireland respondents pointing to rising workloads in this area, which was above the UK average.
Public housing, public non-housing and infrastructure all continue to see declines in activity however, along with commercial construction activity.
As a result, Northern Ireland was one of only two UK regions where the balance of surveyors reported an overall decline in workloads. Once again, Northern Ireland was also the only region where surveyors reported business enquiries falling.
Comments from surveyors suggest that the current political landscape, with no local administration operating and Brexit uncertainties, have lent to the present situation as public spend is limited and investors are proceeding with caution.
On a slightly more positive note – at the end of 2018, the 12-month outlook in terms of workloads was flat but this has risen to a more positive level, albeit below the UK average.
On the other hand, Northern Ireland is the least optimistic in terms of 12-month forecasts for employment prospects and profit margins.
Jim Sammon, RICS Northern Ireland Construction spokesman, said: “House building remains the positive story, but the local construction sector continues to be faced with an unsettling overall picture, particularly regarding public-funded work.
“Northern Ireland continues to feel the effects of the challenging political circumstances, and whilst the imminent threat of a no-deal Brexit has clearly receded, investors appear to be continuing to proceed with some caution,” he adds.
David Jones, Head of Real Estate, Tughans said: “The challenging, and much publicised, retail landscape is no doubt reflected in the drop in private commercial activity, and it is no surprise that the political situation continues to be felt regarding work that is dependent on public funding.”
“Private house-building, on the other hand, continues to be an area of real strength in the market with the demand for new build properties. But those in the sector will be hoping for more widespread growth in the quarters ahead, and to see more decisions being made around public investment in infrastructure and other projects”, he adds.
The key headline Northern Ireland findings of the latest survey are as follows (all figures are the net balance of respondents):
- The headline workloads/activity net balance for Q1 was -6% (meaning that 6% more respondents reported falls in workloads in Q1 2019 than reported rises)
- Public non-housing activity saw a decline according to a net balance of -44% of respondents, while a net balance of -11% also reported a drop in private commercial activity (after a rise in Q4 2018)
- Infrastructure activity remains in negative territory according to a net balance of -13% of respondents
- Public housing workloads and private industrial activity also are suffering according to a net balance of -14% of respondents in each instance
- However, a net balance of 19% of respondents reported a further increase in private housing workloads
- Looking forward, Northern Ireland surveyors remain the least optimistic in the UK with regards to employment over the next 12 months, with a balance of +5% saying they expect to take on new staff in comparison to a UK average of 17%
- Forecasts of year ahead workloads are also the lowest in the UK despite an increase in the past quarter, showing a balance of 16% compared to an average of 28% for the UK
- NI respondents therefore expect to see profits remain in negative territory in the year, with a net balance of -17%