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2023 Review: Mixed Picture For Construction Sector As New Year Dawns

2023 began with the spectre of high interest rates combined with the ongoing ‘deal or no deal’ over the restoration of an Executive loomed large over the construction sector, yet there are the first glimmers of hope in major infrastructure projects.

At the same time of media attention on the cost of living has been, rightly, on household budgets without due attention to the increased costs and supply chain issues that hit public and private developments.

However, with major infrastructure schemes visible it is clear that any gloom that the sector may have experienced there have been the signs of the green shoots.

The major investment in the new transport hub, Grand Central Station, will see continuing employment. The work to complete the York Gate train station infrastructure is matching the influx of students to the Belfast Ulster University and associated housing for those students the face of the city could be seen as hopeful.

Combined with this November saw Belfast City Council approve four new hotels, with three in Cathedral Quarter.

While many major works have been much trumpeted, they are among several multi-million pound construction projects, with the children’s hospital development on the Royal Victoria Hospital site one of the most significant.

The Lakelands Retail and Leisure Park is nearing completion and occupancy of units is anchored by The Range and Brunswick Moviebowl, with work on the hotel still to be added on the former Unipork site.

A number of residential projects, such as in Dungannon and Antrim, might have been seen as signs of confidence in housing, but it has been a year of mixed signals. The increased mortgage rates that matched the Bank of England’s statements on interest, had a chilling affect on new buyers.

The first nine months of 2023 saw house sales down by 18%, according to figures released by HMRC. The reduced figure of 71,400 transactions compared to 21,300 in the same period in 2022 should be offset by a busier than anticipated second quarter, including a slight increase in sales value. Given the 30% reduction in new housing starts at the beginning of the year there are those who anticipate a demand-led price increase.

Matched by a number of public sector housing plans, not least the news in December that the Housing Executive has started building for the first time since the mid-1990s. The north Belfast site, delivered by GEDA, will see six new homes built with energy efficient profiles is the outworking of the announcement of the then Housing Minister, Carál Ní Chuilín, in 2020. Evidence of how a functioning Assembly can provide the impetus for development, albeit that it can take significant time to see their fruition.

Housing associations will still dominate the new public sector housing. In May Choice Housing, one of Northern Irelands largest housing associations, announced an investment of £14m to deliver affordable housing and private rental units at the iconic King’s Hall site among several new projects they announced in 2023. However, planning was the crux, with approvals stymied by issues such as inadequate sewage infrastructure.

There have been some where indicative planning permission, not least the approval of 1,300 new homes near Lisburn and the M1 motorway.  Including a hotel and riverside park the plan includes improved public transport linked park and ride scheme. It comes at a time when Translink is investigating improvements and extension of rail lines in the area, and links to the International Airport.

Mid-year came the announcement that preparatory construction had started on almost waterfront homes on the banks of the River Lagan, as part ongoing development in the Titanic Quarter, with £105m of the total of £174m already in place.

The Loft Lines plan eventually leading to It will comprise 627 build-to-rent units and 151 affordable homes across three buildings of between 11 and 17 storeys in three multi-storey buildings around a shared square.

A skilled workforce for major projects such as this, and SME’s in all parts of the sector is an ever-present issue. The new Assured Skills welding course at South West College, and the Construction Industry Training Board’s collaboration with W5 is an indication that it is being taken seriously. This is especially important given the stark warning in April from the Construction Skills Network that there is a need for an additional 217,000 workers by 2025 to fulfil the industry’s ambitions.

New skills were becoming increasingly relevant across 2023, as innovative technology became more prevalent, from improved data collection and analysis through to the application of AI and 3D manufacturing. The pace of such developments, and the training needs that come with were notably recognised by the construction sector and was being matched by courses and curriculum considerations by the further and higher education institutions.

As COP28 wound to its controversial end companies from small to large were conscious of the need to drive forward, despite the inconclusiveness of regional, national, and international agreements. The much-vaunted Northern Ireland Climate Action Plan set targets of a 48% reduction in net emissions by 2030 and net zero by 2050 was not a driver for the construction sector in 2023, given that many of the actions will long be in fruition. What was significant was the industry need to consider energy costs and the ever-growing public desire and awareness of the climate crises.

The factor that had been hampering sustainable energy generation was being constrained by the ageing infrastructure. The announcement formally in June of £3bn investment in the electricity network between 2023 and 2050 will address the barriers in the way to link sustainable energy generation including wind, solar and heat pumps.

Highlighted a number of times by numerous companies throughout 2023 the current network is a barrier to linking Northern Ireland’s 910,000 businesses and homes to a modern generation system are a crucial part of the future.

The wider sector is responding as part of how it addresses the customer demand and the inclusion of sustainability in tender documents. The figures revealed in September that installations of Solar Photovoltaic (PV) panels at UK properties has risen by 40% over the last five years, and by 15% in the last year alone, showed that customer demand is in place, and across 2023 a number of high-profile installations took place such as the Ramada Hotel at Shaw’s Bridge.

Similarly property developer Fraser Miller announced that the current phase released in its £70m Lancaster Park housing development have been built to ‘Passivehaus’ standards of low energy building practices and reduced energy costs for homeowners.

As businesses look forward to 2024 there is, much like January of 2023, they are faced with the proverbial curate’s egg; partly optimism and partly pessimism.

The Federation of Master Builders has urged caution saying that economic growth across the UK has been stymied by a fall in the overall number of construction and residential output.

At the same time, it appears that interest rates have stabilised. While there is no indication of a reduction, more certainty on the interest will be lead to greater confidence from investors and mortgage borrowers.

Of course there was no immediate prospect of a return of the Assembly and Executive as the old year drew to its end. Secretary of State, Chris Heaton-Harris, may have announced increased budget if the institutions returned.

The restoration of an executive and ministers would be a considerable boon for every part of the construction sector, so the year will end with wishes from all to have politicians in post to approve new policies and project investments. Indeed, all parts of Northern Ireland economy needs progress on all parts of its infrastructure that can be progressed. The plans in the pipeline announced this year include, water treatment, multiple road improvements, and the consultation and report on the NI Railways network.

At least the seemingly endless struggles to restore the Assembly pale in comparison to the woes of sports. While the stadia development initiatives have petered out into incoherence they are nothing compared to naming Casement Park as a venue for games in football’s Euro 2028 tournament. Maybe that will be an easier project for the Secretary of State.

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