New SCSI / PwC Irish Construction Market Monitor

New SCSI / PwC Irish Construction Market Monitor

New SCSI / PwC Irish Construction Market Monitor

  • Press Release

Key Highlights 

  • While sentiment is more subdued than a year ago, 7 out of 10 chartered surveyors believe the overall outlook for the construction sector is positive 
  • 61% say their firms are operating at full capacity  
  • 34% expect an increase in their firm’s headcount, 59% believe it will remain the same over the coming year  
  • Rising interest rates means development finance is increasingly difficult to source 
  • This along with rising inflation and labour supply shortages are putting the viability and affordability of projects under huge pressure    
  • Due to uncertainties, survey finds many companies are not planning to further invest in modern construction methods 
  • Lack of funding and labour shortages seen as major barriers to achieving retrofit targets  

Wednesday 21st June 2023: While 71% of chartered surveyors believe the overall outlook for the construction sector remains positive, this is down 21% on last year, as higher interest rates, access to development finance and cost inflation continue to challenge the viability of projects. 

According to a new report which tracks key trends and activity levels in the Irish construction sector, 61% of surveyors say their firm is currently operating at full capacity while just over half (52%) expect their workload to increase over the next 12 months. However, the latter figure is down significantly on last year’s figure of 82%. 

The more subdued mood is also reflected in forecasts regarding headcount and profit growth. While 34% expect headcount to increase – down from 53% last year – 59% expect it to remain the same. And while 25% expect profit margins to increase – down from 41% last year – 54% expect it to remain unchanged.  

These are among the key findings of the sixth Society of Chartered Surveyors Ireland (SCSI) and PwC’s Construction Market Monitor Report, which is published today. The survey which was conducted last month was informed by the views and opinions of over 150 chartered surveyors.   

The President of the SCSI, Enda McGuane said that while the figures painted a largely positive picture and show that the sector has largely recovered since the onset of the pandemic, the continuing contraction of development finance is a concern. 

“Surveyors ranked ‘viability of projects’ as the number one reason for the difficulties associated with raising development finance, followed by access to bank finance/credit and access to equity/venture capital. According to our members, the hike in interest rates has become a key reason why access to finance is becoming increasingly difficult to acquire. The higher interest rates are affecting exit yields and thus making more projects unviable. When you combine these pressures with high inflation rates as well as more localised challenges around the availability of skilled labour and operating capacity, the pressure on feasibility and ultimately the viability of some projects is clear.” 

Barriers to achieving retrofit targets 

The main objectives of the National Residential Retrofit Plan are to retrofit 500,000 homes to a BER of B2 and to install 400,000 heat pumps in existing premises to replace older, less efficient heating systems by the end of 2030. In the report 44% of surveyors said the availability of finance / lack of sufficient grant funding are negatively impacting the ability to reach these targets while 41% claimed labour supply shortages are the main barrier. 

In terms of potential solutions, nearly half of respondents (47%) said grant funding needed to be improved and simplified while 22% listed ‘increased capital allowances / reduction in VAT’ as another viable solution to bridge the gap in costs and increase competitiveness in the market. According to SEAI, there were 27,199 property upgrades in 2022, and 8,481 of these properties successfully achieved a BER B2 rating, meaning that Government has delivered approximately 1.7% in 2022 of the 500,000 targets for 2030. 

Sinead Lew, Partner, PwC Ireland Real Estate practice, said: “It is welcome that the Government remains committed to Housing for All, Project 2040 and the National Development Plan providing a clear pipeline of future projects and capital investment for the construction sector. The industry has a great opportunity to lead the way in terms of achieving climate action goals.   However, feedback from the survey indicates that the current retrofitting support grant is not sufficient to ease the cost involved.  It also highlights that the gap between the cost to retrofit and the market value on completion can be challenging. More needs to be done to encourage a wider take-up of retrofitting.” 

Companies not investing in technology 

According to a recent report* 60% of construction companies here are not planning to invest further in any modern construction methods or emerging technologies over the next five years. Enda McGuane says those findings align with the challenges outlined within this survey where the time and cost associated with upskilling current staff to use digital tools was found to be the largest obstacle in adopting new technology. Mr McGuane said it was clear firms required support in this area. 

“According to the member survey, the current cost of investment is high, particularly when compared with return over the short term. The risk of low returns during an uncertain market is particularly difficult for SMEs to consider. In order to capitalise fully on the opportunities which, exist in the market, it is critical that the Irish construction industry continues to foster a culture of innovation and digitalisation and that it is supported and incentivised to do so. Addressing the slow rate of technology adoption will be key to tackling some of the current constraints within the industry, such as labour shortages, operational capacity, and productivity” he concluded.  

*’Construction in Ireland 2022: Building a Workforce for the Future’ 


For further information 

Contact Kieran Garry 

GPR Communications 


Note to Editor  

The Survey 

This report has been informed and guided by the views, perceptions, and opinions of respondents who are chartered surveyors active in the construction sector, as well as input from other industry participants. The research included an online survey conducted in May 2023 by 155 respondents. The report is also informed with data from previous SCSI/ PwC surveys. The respondents to the survey are professionals who work in the property and construction markets in large corporate firms, construction agencies, government bodies and financial institutions. The surveyors are a mix of quantity, planning and development, building and project management-chartered surveyors. SCSI and PwC would like to thank all those who contributed to the research.  

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