Over 95% of Irish construction industry leaders are favourable about the outlook for their sector for the next three years.
An overwhelming majority (87%) reveal that they expect their turnover will increase in the year ahead of which nearly two-thirds expect their turnover to increase by more than 10%.
Over two-thirds (68%) expect to increase employee numbers of which nearly half (44%) are planning to increase the workforce by more than 10%. However, a sign of some remaining challenges is that over one in ten (12%) still plan to reduce the workforce.
These are some of the key findings from PwC’s Property & Construction Industry Survey published this week.
Access to finance and onerous building regulations are challenges
Almost two-thirds (63%) said that the top challenge for the industry is securing finance for projects. This is followed by burdensome building regulations (56%), competitive project pricing (49%) and the planning regime (44%).
Almost half (45%) have sought non-bank finance in the last 2 years with the majority of this being private equity (83%) followed by joint venture arrangements (44%) and Mezzanine finance (33%).
According to the survey, the single key reason for the lack of development of zoned and serviced land in Ireland is insufficient access to finance (83%). This was followed by uneconomic development prospects based on current property prices (63%), excessive building regulations (53%), development levies (44%) and the Central Bank limits on mortgage lending (42%).
Speaking about the survey results, Ronan MacNioclais, Tax Partner, PwC, said:
“The survey highlights that access to finance, onerous planning and building regulations and uneconomic development prospects may be contributing to the low levels of planning applications compared to demand. There needs to be an equilibrium between the cost of building, price and sensible regulation. There are concerns that the permissions granted thus far in 2015 are below those in Q3 2014 and that this will have a knock-on effect on an already supply constrained market. From an FDI perspective, it is also important that high end office space is readily available.”
Reducing the VAT rate applicable to property developed within a specified period is the most popular taxation measure which could be introduced to encourage development according to nearly half of respondents (49%). Nearly a third view a reduction in corporation tax to 12.5%, from a current 25%, on land dealing profits where land is subsequently developed within a specified period as another such measure.
Nearly half are trying to plug the skills gap
Nearly half (45%) are struggling with the skills gap and confirm they are experiencing difficulties recruiting certain types of individuals with specialist skills. According to the survey, skilled contractors (78%) and site managers (44%) are by far the greatest areas of skills deficiency.
Ronan MacNioclais added: “The survey confirms a definite return to confidence and activity in the construction sector with the majority expecting increases in turnover and employee numbers. However, the survey also highlights that the lack of specialist and managerial skills is a key constraint to this potential growth. There is a real need to carefully manage the talent agenda, up-skilling and retraining existing staff and perhaps looking abroad to bring back some of the talent that has emigrated.”