There was a 20% drop in the value of construction project commencements in the first quarter of this year compared to the same three month period last year, according to a new index from Building Information Ireland.
Building Information Ireland's Managing Director Danny O'Shea explained that the drop in value was of the order of €333m, bringing the total value of commencements in the three month period to €1.36 billion.
He pointed out that the index told two different stories. "Two things jump out from this index. There's the fall in the value of commencements - these are projects that are starting now. And the other measure is planning applications. They are up over 40%." However, he said that there may have been a slight distortion in the figures for project starts. "With commencements, we can look at extenuating circumstances from last year. The new building regulations came into effect on March 1 2014. That had the effect of causing a spike in the first quarter which might exaggerate the figures slightly," he explained.
Danny O'Shea said that indicated that the picture was perhaps not as bleak as the figures suggested. He also pointed to the flow of projects in the pipeline. The value of project applications was up 42% in the first quarter to €3.6 billion. He emphasised that there was a long lag period between an application going in and the project actually starting. "The average lag time across the industry is 79 weeks. The worst performing sector is housing, where the lag time is around 80% longer than the average. The question remains, is that because of onerous building regulations or is it because developers are waiting for the market to move?" he asked.
Mr O'Shea said the country was divided into four regions for the purposes of the study. Dublin and Leinster were performing best in terms of applications. Munster recorded an increase in both metrics while Connaught/Ulster was lagging behind on both.
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