Trends and technologies likely to impact Ireland’s construction market in 2024

It’s that time of the year again… As the new year fast approaches, we gathered insights from our Townmore team and partners about the trends and technologies they think are likely to impact the marketplace next year. With inflation showing signs of pulling back and a suggestion of interest rate hikes slowing towards the latter part of next year, we see reasons to be hopeful. However, we are keenly aware of the market challenges that persist. Taoiseach Leo Varadkar, this week, spoke of “dark clouds on the horizon” and this is something the industry has been watchful about for the past few years.

MARKET FORCES

Yes, inflation and interest rates are likely to have a significant impact in 2024, but the trends are moving in the right direction (perhaps not as quickly as we might have hoped for). The Central Bank of Ireland’s Quarterly Bulletin indicated that consumer price inflation is expected to moderate from an average of 6.5% in 2022 to 2.8% in 2023, and further to 2.1% in 2024. This projected decrease in inflation is underpinned by the assumption that energy prices, a key inflation driver, will decline from their peaks but will remain above pre-crisis levels​​. And yet, projects continue, pipelines are filling up quickly and there is still a long way to go before housing supply will adequately address levels of housing demand that show no sign of abating. A number of recent Irish and global reports have forecast a growth in investment in construction, however, constraints due to higher material costs and labour shortages are expected to temper this growth. Planning permissions and commencements suggest a strong pickup in construction, but these factors will likely limit the extent of growth in the sector. Modified investment growth in construction is forecast at 7.0% for 2024​​. This outlook, particularly the projection for moderating inflation, suggests a more stable environment for the construction sector in Ireland in 2024, which is welcome. Of course, it must be noted that these forecasts are highly sensitive to global economic developments, including the ongoing impact of the war in Ukraine and potential disruptions in global supply chains.

CAPITAL EXPENDITURE

Here in Ireland, 2023 saw an increase in capital expenditure and the Government has further increased core capital expenditure for 2024 to €12.8 billion, marking a €0.9 billion rise over the previous year’s allocation. This is in line with the National Development Plan (NDP) and is expected to address significant infrastructure requirements across Ireland​​, which is good news for the industry and for development in the regions. As an Offaly-headquartered business, with several major projects ongoing in Dublin and the Greater Dublin Area, we see the impacts of poor regional economic strategies and the long-promised narrowing of the gap between Dublin and the rest of the country just isn’t happening.

FUTURE SKILLS

The government has recognised the critical shortage of modern construction skills, and for skilled labour across the industry, and has invested heavily in upskilling. As a fast-growing contractor, this is something about which we feel strongly. In fact, earlier this year we partnered with Ireland’s first female tower crane operator, Kate Fahey, to launch the #ImInConstruction campaign (https://townmore.ie/news/townmore-what-does-a-career-in-construction-look-like-in-2023/), which showcases the vast range of careers available within contemporary construction. Education, unsurprisingly, received the fifth highest capital allocation of €0.6 billion, part of which will directly fund the development of centres of excellence for Net Zero Energy Buildings and Modern Methods of Construction (MMC). These centres of excellence focus on the technological and offsite manufacturing side of construction.

TECHNOLOGY TRENDS

We like to think of ourselves as a forward-focused contractor, ready to embrace technology to improve quality and HSEQ, and to drive efficiencies – and we are! But the pace of tech adoption since Covid has been well ahead of schedule, and we are exploring more for 2024. Building Information Modelling (BIM) is standard on most projects, AI is powering most of our platforms, and team communication is improving on a constant basis. Technology allows our team to deliver on the sustainability targets on a project by project basis.

SOCIAL VALUE

The increasing trend towards articulating ‘social value’ through tenders etc. is an interesting one for us. At Townmore, we have been delivering residential developments at scale for many years – increasingly through design and build contracts.  For us, the emphasis has always been on delivering great places; we create places where communities can thrive and grow. We always tap into the local construction ecosystem to extend our supply chain and, where possible, we bring them along on our growth journey. We don’t necessarily call this social value, we call it doing our bit to contribute to the local economy, which makes the places we deliver more desirable – doing the right thing is a win-win-win placemaking scenario.

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