Ireland's Development Boom Shrugs Off Inflation And War
Buoyant demand for offices and industrial space has helped see Ireland’s construction sector brush off fears of inflation and war in Ukraine, BNP Paribas Real Estate Ireland’s latest purchasing manager’s index has found.
The index showed that activity is now rising at the fastest rate since Ireland’s economy reopened following the pandemic lockdown.
Commercial building led the activity for the third successive month with logistics posting continued demand.
The headline seasonally adjusted BNP Paribas Real Estate Ireland Construction Total Activity Index increased to 58.4 in February from 56.1 in January, the report said.
The latest reading pointed to a 10th successive monthly expansion in construction activity since July last year. The report warned that inflation could have an impact on the real estate sector as prices rise and some materials are found to be in short supply, noting a “steep rise in input costs” due to material shortages.
“The February PMI shows that construction activity is now increasing at its fastest pace since last summer’s post-lockdown rebound," BNP Paribas Real Estate Ireland Director & Head of Research John McCartney said.
“[The strength of commercial development] is no surprise considering that the amount of logistics space under construction in Dublin has more than doubled in the last year, and that 2022 is set to be the biggest year for office completions since 2007."
However, strong commercial activity has not crowded out residential construction. Consistent with the sharp rise in commencements over the last year, the housing activity index accelerated to 58.5 in February, well above the no-change figure of 50. This continues an 11-month run of expansion in housing activity.
The construction activity report from BNP follows on from a study that found that €7B had been invested in Dublin's booming build to rent sector in five years.
The study by Hooke & MacDonald found that 12,000 homes had been built during that time, housing up to 25,000 people.
