The latest Construction Market Intelligence (CMI Q1 2025) report from Northern Ireland-based construction and property management consultant, Rider Levett Bucknall (RLB UK) forecasts a positive outlook for the region’s construction sector, despite ongoing challenges related to funding and planning delays.
Key Regional Developments
The restoration of devolved government has brought stability to the market, but uncertainty remains due to a lack of clear direction from the Northern Ireland Executive, and, in the absence of funding, some projects remain on hold.
The infrastructure and repair & maintenance sectors are expected to experience the fastest growth. However, long delays in planning approvals, particularly for water and sewerage improvements, are impacting project delivery and stalling long-term transport investments in and around Belfast.
In the commercial sector, opportunities remain limited, with supply outweighing demand for new office space in Belfast. However, retrofit projects are emerging as a key opportunity. There is also a noticeable increase in the number of bid opportunities across the public sector.
There is an active interest to increase sustainable energy production in the region, particularly in offshore wind provision. The current planning system, however, requires several policy changes to enable Northern Ireland to meet its renewable energy targets.
Overall, clients remain optimistic, despite planning delays, and expect their projects to continue to make progress.
Tender Prices & Input Costs
Tender pricing has stabilised, although fit-out costs have increased in the short term. The forecast for 2025 is for a return to expected inflation levels.
Beyond the next 12 months, a steady upward trend is expected but with some local spikes due to skills and labour issues.
- Movements in commodity and materials prices are in line with UK trends for the industry.
- The persistent skills gap is continuing to impact labour availability and wages.
Sector Insights
Education
The education pipeline is set to increase, with the Education Authority Framework for Integrated Consultant Teams set to be released to streamline the procurement process.
Healthcare
The focus remains on maintaining and retrofitting existing assets within the region’s healthcare estates to ensure the operational stability of existing buildings. Funding challenges are impacting the delivery of pipeline projects.
Infrastructure
Preliminary works had commenced to improve the A5 North-West transport corridor but have now been paused due to persistent legal challenges. The scheme to extend rail services across Northern Ireland is gaining momentum with indicative routes shared for consultation, though this is a long-term project to be delivered over the next 20 to 30 years.
Logistics & Manufacturing
The logistics and manufacturing sector in Northern Ireland has seen some growth, with site purchases and new distribution centres opening on the outskirts of Belfast close to the main arterial routes.
Public & Civic
There is increased optimism in this sector following an increase of public sector opportunities being tendered, although contract awards may be hampered by a lack of funding.
Residential
The social housing funding pot has been reduced by 60% for this year, while there is continued interest in purpose-built student accommodation opportunities in Belfast. There is a sustained demand for affordable and rented accommodation, with infrastructure capacity issues impacting the planning approval and delivery of new developments.
Retail
The focus remains on the refurbishment of existing assets, rather than new build, and we are seeing a spike in contractors’ fit-out costs. Out-of-town shopping centres remain attractive for investors following several high-profile transactions in the region.
Sport
The Casement Park redevelopment remains unapproved as yet, with funding discussions ongoing. However, several Irish Football Association projects have successfully secured investment.
RLB Northern Ireland Partner, Noel Devine comments, “The restoration of devolved government has brought much needed stability and boosted opportunities for Northern Ireland’s construction sector. Funding allocations to the public and residential sectors are already driving progress in purpose-built student accommodation, but further investment in infrastructure is crucial to unlock long-term economic growth.
For RLB’s full Construction Market Intelligence Q1 report, please click here.
