Celtic Tiger still roaring as spending and population soar

The emergence of Ireland as a mature construction market continues, according to the latest study on the country’s building sector. A summer review by Davis Langdon PKS on the state of the sector across the Irish Sea claims the overall market will grow by 1% this year. This marks 12 consecutive years of growth in construction in Ireland. Marry this with a prediction from the country’s Central Statistic Office that the Irish population is expected to increase by 25% – from four to five million – by 2021, then it is little surprise Irish consultants remain upbeat. “The market is still buoyant,” says Shane Boyd, a director at QS firm Boyd Creed Sweett, an affiliate of Cyril Sweett.

The Davis Langdon PKS study finds that while there has been a let up in the booming housing market, which accounts for nearly two thirds of construction output in the country, this year it has been partially offset by a growth in civil engineering and general construction (see box). The drop in housing was expected, according to Irish consultants. “Last year was exceptional for housing,” says Mark Kelly, managing director at Healy Kelly Turner Townsend. “Residential is still very strong.”

Future growth is set to come largely from public sector construction such as health and education, according to locals. One consultant claimed that education spending alone was expected to be around £3bn for the rest of this decade.

Dublin and Cork are still to be linked by a motorway. There is a long way to go yet

Shane Boyd, Boyd Creed Sweett

The PPP sector is beginning to mature in Ireland in order to kick-start public construction programmes. A shortlist of three consortia is bidding for a £60m criminal court scheme in the centre of Dublin, near Huston station, and design teams have been called on to plan a new PPP prison for the outskirts of the capital.

“There have been teething problems but the schemes are now starting to come out,” is how one consultant describes the market. On the private sector front, Boyd Creed Sweett’s Boyd points to the future emergence of tall buildings in the capital, Dublin, such as the planned U2 tower, a mixed-use scheme in the Grand Canal area of the docklands. Davis Langdon PKS is QS on the £40m job. “Tall buildings are a major thing on the agenda,” Boyd says.

There are projects worth a couple of billion Euros lying about waiting to be approved Construction Industry Federation on why projects need the tax-break extension

The Celtic market is not without its concerns however. A major one is the ending of tax reliefs available for developers of housing, hotels, student residences and private hospitals in mid 2006. This could lead to a serious drop in construction in the second half of next year, according to Davis Langdon PKS’s report. Managing partner Michael Webb has called for an extension of such tax breaks until 2007 in order “to avoid an expensive rush to finish these projects in 2006”. This has been backed by contracting trade body the Construction Industry Federation which has called for the projects currently in the system to be allowed to be completed regardless of next year’s deadline. “There are projects worth a couple of billion Euros lying about waiting to be approved,” a spokesman said.

There also remains an urgent need for new infrastructure in the country. “There is a long way to go yet,” says Boyd. “Our two major cities (Dublin and Cork) are still to be linked by a motorway.” The Irish government appears to have realised the need for quantity surveyors on such schemes to offset overspends that have blighted recent projects, including the Dublin Port Tunnel, which went 25% overbudget. Local firm the Bruce Shaw Partnership was recently appointed by the National Roads Authority to advise on its road building programme, the first time such an appointment has been made. “They are finally starting to accept it’s been a major problem,” as one consultant puts it.