Tom Moloney, Managing Director, Construction Information Services (CIS), details the levels of pipeline and active construction covering 2020 with a particular focus on Q4 2020 and offers some insight into the impact of the Covid-19 lockdowns.
By any comparison, 2020 has been a strange year. Impacted by lockdowns, and to a lesser degree Brexit, the construction industry has faced shutdowns, interruptions, changing working conditions and supply issues and yet, despite all of the upheaval, has remained somewhat resilient in many sectors.
In the Republic of Ireland in 2020, the pipeline for residential projects increased in value from 2019 by 38%, adding an additional 45,670 residential units. On the ground, residential project starts have increased in value by 2% to just over €3.5bn although the total number of residential units over the 500 project starts has declined by 4% to 21,889.
In Northern Ireland, the value pipeline for residential projects has fallen significantly by 28% to €944m from 2019. The number of residential units approved over the 579 projects has fallen by 10% to 9,511. Residential project starts have also fallen significantly in 2020 from 2019 with only 73 project starts valued at £417m (a 42% fall) accounting for 4,388 units (a 45% fall).
In the non-residential sector in the Republic of Ireland, pipeline investment has fallen overall by 5% from 2019 although there has been increased activity in the Commercial, Hospitality and Medical sectors. On the ground activity has fallen overall by 24% with only the Medical and Community and Sport sectors bucking the downward trend.
In Northern Ireland the non-residential pipeline has fallen in value from 2019 by 18% although there has been significant increased activity in the Commercial, Agricultural and Community and Sport sectors. Project starts in Northern Ireland in 2020 fell by 38% overall, offset somewhat by increases in on-the-ground activity in Education and Community and Sport sectors.
Despite the unprecedented impact of COVID-19 on Irish construction, new planning applications in both jurisdictions have risen in 2020 compared to 2019. The upward trend is accounted for primarily by increases in applications for new single homes and home improvements particularly noticeable in Quarters 3 and 4.
Single Dwellings applications in Q4 2020 rose by 37% compared to Q4 2019 in ROI and by 35% in NI. Home improvement applications in ROI rose by 45% in Q4 2020 compared to Q4 2019 and by 49% in NI. Applications for developments outside of self build fell by 7% and 2% in ROI and NI respectively in 2020 compared to 2019. Q4 figures, when compared to the same period in 2019, fell by just 1% in ROI and 2% in NI.
Unsurprisingly planning grants fell across both jurisdictions in 2020. Overall, grants were down 7% in ROI and 18% in NI compared to 2019 grants. The impact of the first COVID-19 lockdown showed in Q2 as planning grants fell by 49% in ROI and 43% in NI over the same period in 2019. ROI planning grants recovered quickly in H2 rising by 38% overall from 2019 figures. In NI however, the downward trend continued and planning grants fell 8% in H2 2020 versus H2 2019.
Public Sector Construction Tenders
Conflicting pictures emerge between ROI and NI with regard to public sector tenders published in 2020 compared to 2019. The volume of ROI tenders rose by nearly 3%. In NI the total number of construction-related tenders fell by 28%. More worryingly, calls for tenders for design teams in NI fell by 54% while remaining steady in ROI. These tenders are a good indicator of the future pipeline for core, productive and social infrastructure projects which many commentators believe will be instrumental in plotting a path to recovery from the impacts of COVID-19.
CIS have been closely monitoring extensions to tender deadlines due to the impact of COVID-19 and many deadlines have been pushed out beyond year end 2020. In December 2020, 25% of all tenders had deadlines extended into the new year.
Project Starts are down this year compared to last year. There was little or no on-site activity outside of essential works in the months after the initial COVID-19 lockdown in March. Starts picked up again in May but have shown a downward trend from July into Q4 as new restrictions came into force. Q4 figures in ROI for 2020 show a 16% fall from the same period last year and for NI a 15% fall.
Q4 Pipeline (Planning Grants)
In Q4 2020, plans were granted for 8,302 housing units (excluding self-build) which represented a 40% fall in units granted in Q4 2019. It also represents a 45% fall in residential units granted from the previous quarter (Q3 2020) – a fall in investment of just over €1.4bn.
There is an almost even split between numbers for traditional housing and apartments. The upward trend of apartment living continues with steady YOY rises especially in plans granted for one and two-bedroom apartments.
Plans were granted for 28 public sector housing schemes with a total of 723 units and an overall investment of €144m. This is a 6% fall from Q4 2019 but an increase from the 674 units granted permission in Q3 2020. The largest public sector scheme was Belgard Square North Tallaght where permission was granted in November for the construction of 133 affordable rental apartments with a community facility.
In the private sector the largest scheme granted permission in Q4 2020 was a mixed-use (residential and commercial) scheme, including 725 dwellings in Ashdown, Dublin 15 for Ruirside Developments Limited.
In the Eastern Region, four projects over €50m were granted planning permission. Two were outside Dublin. Castlestar (Athlone) Limited were granted permission for a €93m development in Athlone consisting of 426 units. In Trim, Co. Meath an Bord Pleanála granted permission for 320 dwellings to Keegan Land Holdings Limited (A legal challenge was given leave to proceed in January 2021 against this development).
In the Southern Region, 413 units were given the go ahead as part of a €90m development in Wexford Town. The scheme will be delivered over four phases. In the Northern and Western Region, 411 units in total were granted permission in the quarter, a fall of 66% over Q4 2019 and a fall of 46% over Q3 2020. The largest project in the region was for 161 units as part of a mixed-use development to be delivered by Roykeel Limited in Oranhill, Co. Galway.
Four student accommodation projects were granted permission in Q4 2020 for a total of 1,437 student beds. The largest project, a €51m development in Terryland Co. Galway for Exeter Ireland Property III Limited, was granted permission in October for 920 bedspaces.
Planning grants in the non-residential sector increased by 8% and by €1.5bn compared to Q4 2019. As we shall see however, the increases in pipeline investment are confined to the commercial and hospitality sectors. Public sector projects accounted for €321m of the total pipeline value ranging over 96 projects. The largest public sector project was the €150m Film Studio Campus in Greystones, Co. Wicklow for Greystones Media Campus Limited – a joint venture between the NTMA and Sisk.
Industrial (Down 5.9%)
131 Industrial projects were approved totalling €253m, representing a 6% fall from the same period last year. Within this sector, 52 Warehousing and Storage projects with a value of €149m (164k Sqm) represented a 180% increase from last year (Q4 2019). The largest project was a €57m Logistics and Warehouse Unit in Baldonnell Business Park for MLEU Dublin Limited.
Commercial (Up 168%)
Although the number of Commercial projects granted planning in Q4 fell by 18%, the level of pipeline investment rose by 168% over the same period last year. Within the sector only shops and retail showed a decline. The largest area of investment was in Office building with 79 projects in the quarter valued at just over €500m representing 298k Sqm of development space.
Three projects are valued at over €100m, the film studios in Wicklow, mentioned earlier; a mixed-use development at the Dublin Institute of Technology / Technological University site, Kevin Street Lower, Dublin 8 (currently under appeal); and a €103m Office and Hotel development at Spencer Dock.
Hospitality (Up 41%)
Investment in this sector rose primarily due to 25 hotel projects granted planning and representing a 97% rise in hotel investment over Q4 2019 and equating to 1,395 hotel beds. The largest project by some distance was for the redevelopment of the Custom House site in Cork City to provide a 240-bedroom hotel and including retail, office, food and beverage, distillery, tourism and leisure components.
Education (Down 41%)
Pipeline investment in Education fell by 41% in Q4 2020 compared to the same period last year. Pipeline values for Higher Education fell by 77% while applications granted for schools rose in value by 59% to €71m equating to 282 new classrooms in the pipeline. The largest project gaining planning approval in Q4 2020 was a €17m Department of Education project for a new school campus in Saggart, Co. Dublin. The project is currently under appeal.
Medical (Down 31%)
The Medical sector planning pipeline fell to €166m in Q4 2020, a 23% fall from Q4 2019. Investment in hospital and nursing home schemes fell by 34% and 46% respectively. These falls were mitigated by a 76% rise in the value of permission granted for other medical facilities such as health and primary care facilities. The largest projects in the sector were a €30 Extension at University Hospital Galway and a €25m Care Residential Building in Co. Wicklow for Kiltipper Woods Care Centre (currently under appeal).
In Q4 2020, 126 residential projects with a gross volume of 4,001 units started (excluding self-build). This represented a 19% fall in the overall value of residential project starts over the same period last year. It also represents a 17% fall in the value of project started in previous quarter (Q3 2020) – a fall in investment of €146m. Project starts by units for traditional housing fell by 26% and by 32% for apartments. The overall growth in one, two and three-bed apartments continues accompanied by a similar drop in the volumes of traditional housing projects starting. Twenty-three public sector housing schemes were started comprising 488 units and valued at €75m, representing a 53% fall in the value of residential starts compared with Q4 2019 but only an 8% fall from Q3 2020. The largest public sector project started was a €14m Housing Development for Cork City Council in Mayfield comprising of 153 units and being built by Clancy Construction.
In the private sector, the largest scheme started was a €73m Housing and Retail development in Santry, Dublin 9 consisting of 330 apartments for Cosgrove Developments. In the Eastern Region, 60 projects were started comprising 2,379 units with an overall value of €443m. The majority are Dublin based. In the largest project started outside of Dublin, Townmore Construction commenced works on 160 1 & 2 bed apartments in 4 no. buildings in Bray, Co. Wicklow.
In the Southern Region 974 units started on site, a 24% fall in volume from Q4 2019. As well as the development in Mayfield, Cork previously mentioned, work also began on a €15m Housing Development in Mahon on the outskirts of Cork City.
In the Northern and Western Region, the only region showing positive growth over Q4 2019, 648 units were commenced over 24 projects. The largest projects started were a €35m Residential/Commercial Development in Galway comprising 161 units for BRTW Oranmore Limited and an 88-unit mixed use development in Donegal for Carnvalley Holdings Limited.
The number of projects started in Q4 2020 in the Non-Residential sector fell by 12% over Q4 2019 to 334. The gross value of the starts rose however by 3% to €510m. Public sector projects accounted for 99 of the projects started valued at €242m – a 175% increase from the same period last year. The largest project in this group is a €48m Centre for Creativity Academic Building in Belfield for UCD.
Industrial (Down 48%)
Forty six projects started in this sector in Q4 2020 representing a 48% fall in the value of starts from Q4 2019 and a 68% fall from the previous quarter. Within the sector only Factory and Industrial projects showed an overall increase from the same period last year. Within this sub-sector there were two ‘distillery’ projects valued at €9m. A €5m – Distillery/Visitors Centre in Monasterevin. Co. Kildare started on site in October after the completion of enabling works and a €3.9m New Distillery Complex in Ardara, Co. Donegal began in November for Sliabh Liag Distillery.
Commercial (Up 34%)
Although the number of project starts declined in the quarter, the value of projects started rose by 34% over the same period last year but fell by 67% over the pervious quarter continuing the erratic up and down nature of this sector. Only Office developments showed an increase in the quarter compensating for falls in Shops and Retail (-23%), Petrol Stations (-94%) and Car Showrooms (-76%). The largest project started was a €36m redevelopment of Hawkins House in Dublin 2 for the Office of Public Works.
Hospitality (Down 79%)
Declines in project starts in the Hospitality Sector continued across the board. Only three projects were valued at over €1m. The largest project started were works on the €2.4m redevelopment of Sweeny’s Hotel in Dungloe, Co. Donegal.
Education (Up 202%)
Project Starts in the Education Sector rose by over 200% in value in Q4 2020 from the same period last year and by 64% over project starts in Q3 2020. As a result, a total of 351 classrooms are due to be built. Investment in starts in the Higher Education category rose from €6m in Q4 2019 to €83m in Q4 2020. Investment also rose in the school’s category increasing 74% from Q4 2019 to €48m. Four of the top five schools’ projects are in Kildare, the fifth being in Mayo.
Medical (Up 55%)
Despite a 26% decline in the number of medical projects started, the overall value and volume of floor space increased significantly in Q4 2020 from the Q4 2019. Primary Care Centre projects account for three of the top five projects started with the largest being the €15m change of use from a protected Mill Building structure and newer office building to a Primary Healthcare Centre in Fermoy for UHPC International Limited.
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