CONSTRUCTION activity in Northern Ireland increased for the first time in two years, albeit at a modest rate, according to the latest Royal Institution of Chartered Surveyors (RICS) construction monitor for Q1 2024.

A net balance of 4% of Northern Ireland respondents to the survey reported that overall construction workloads rose through the first quarter of 2024. This is the first time this figure has been in positive territory since this time two years ago.

Looking at the subsectors, surveyors reported that all private works saw increases with a net balance of 21% reporting a rise in private housing activity, 4% in private commercial and 19% in private industrials. Surveyors were not as upbeat about public sector activity, with a net balance of -6% noting a fall in infrastructure workloads, -32% in public works and public housing is said to have fallen flat.

Surveyors are more optimistic on the outlook though, with a net balance of 28% of NI respondents anticipating that overall workloads will rise over the next year. This is the highest this figure has been since pre-pandemic. It represents the first survey carried out since the return of the Northern Ireland Executive. And indeed, anecdotal evidence from respondents point to the restoration of Northern Ireland’s political institutions as a factor in the improved outlook.

Although workloads are expected to rise, surveyors in Northern Ireland do anticipate that profit margins will continue to be squeezed, albeit at a lesser rate than seen previously. A net balance of -6% of surveyors anticipate that profit margins will fall over the next 12-month period.

With the uptick in activity in some subsectors, NI respondents report ongoing shortages in skills across all sectors, wit further tightening in some areas. This quarter, surveyors reported increased shortages in quantity surveyors (61% up from 52%) and bricklayers (57% up from 46%). 48% of surveyors noted the continued shortage of other construction professionals which is the same figure as was seen late last year.

Jim Sammon, RICS NI Construction Spokesman, said: “We came into this year off the back of a turbulent 2023, so It is encouraging to see surveyors more optimistic about the year ahead. The construction industry is though continuing to navigate many challenges including skills shortages, ongoing high costs, and other economic issues which will continue to be acutely felt into the months ahead.”

“The return of the NI Executive is a welcome development which will enable decisions to be made that can positively impact our infrastructure and Northern Ireland’s journey to net zero. The recent budget highlighted the stark public spending environment, so it is clear that tough decisions will have to be made to support these urgent objectives. This includes the need to be decisive in relation to how revenue is raised and how spending is prioritised.”

Commenting on the UK picture, Simon Rubinsohn, Chief Economist at RICS, added: “The results of the Q1 RICS Construction Monitor suggest that activity in the industry more broadly is likely to start picking up as the year progresses although for the time being, it remains the infrastructure sector where sentiment remains most positive. The more upbeat expectations for the residential segment is particularly encouraging given the sharp fall in supply over the last year or so but, to put this in some context, the latest reading is not indicative of a return to even previous development numbers let alone reaching the goal of 300,000 units per annum.

“Although there is a little more optimism about a likely easing in credit conditions towards the back end of this year, financial constraints currently continue to be perceived as the major challenge facing the industry.

“Alongside this, securing planning is also seen as a key obstacle to getting on site while even with the relatively subdued trend in activity, difficulties in sourcing sufficient quantities of skilled labour are still being highlighted”.