AECOM expects the value of the construction industry in Ireland to be in the region of €32 billion this year, similar to last year.
It said the construction sector across the country enjoyed a greater degree of stability and predictability last year in contrast to the major global events of previous years.
In its annual review, the infrastructure consulting firm predicts a national average tender price inflation of 4% this year.
It said the price of some construction materials, such as steel, have come down but others including concrete have increased. Resource constraints and high labour costs are also keeping upward pressure on prices.
AECOM says completions in the residential sector are on track to exceed government targets of 29,000 for 2023. Commencements in the first 11 months of last year saw an 18% increase to 29,634 on the same period in 2022 and 31,429 in the 12-month period.
However, AECOM warns the Government may struggle to achieve its higher 2024 target of 33,450 new homes without extended affordability measures and incentives to boost purchases and enhance social housing delivery.
The slowdown of the tech sector has unsurprisingly had a direct impact on the commercial office market in Dublin. Coupled with this sector resetting, businesses in general have been struggling to define and establish the new normal in terms of employee presence in the office.
The combination of in-construction commercial office space coming to market and existing tenants reducing their requirements on lease renewals or through sub-letting has led to an increase of vacancy rates in Dublin and other regional cities in the range of 15-18%.
In relation to public projects in Ireland, AECOM is hopeful the approval by Cabinet of the Planning and Development Bill 2023, the largest reshaping of the planning system in Ireland for more than two decades, will quicken the pace at which projects can be delivered.
This year's economic and construction review and forecast also takes stock of progress towards decarbonization and energy security goals.
"There has been a major change in the way we produce, consume, and manage energy driven by policy and regulation changes but progress is not happening quick enough," said AECOM Director and Ireland Country Lead John O'Regan.
"Faster, more decisive action is needed to close the gap between ambition and implementation and to ensure we meet our emission reduction targets."
Mr O'Regan said, even though the aftershocks of inflation as well as a lack of available labour resources and high labour costs continue to be felt, there is good cause to be optimistic about this year.
"Overall, Ireland’s economy is in a positive place," he added.
"There is continued strong growth with mechanisms in place to ensure that capital investment continues at a consistent rate. This gives assurance to the construction sector that business will continue and importantly it gives confidence within the sector to invest in people and skills."
