Construction costs forecast to rise 6.3pc this year, fueled by new green energy standards

(Stock image)

Aine Myler

Shawn Pogatchnik

Construction costs are forecast to rise 6.3pc this year, driven by new energy-efficiency standards and related shortages in skilled workers and specialist materials, according to a new industry report.

Monday's forecast by the Society of Chartered Surveyors Ireland (SCSI) shows that costs already have risen 3.4pc nationally in the first six months of the year and are expected to rise a further 2.9pc by year's end as developers compete for specialist materials and expertise.

"Higher demand from end-users for the latest low energy-use installations is having an inflationary effect on prices," the SCSI said in a statement.

Aine Myler, director general of the SCSI, said the EU-approved Nearly Zero Energy Building (NZEB) standard was increasing demand for already scarce specialists in the design of energy-efficient buildings.

Aine Myler

She said the standard "has rightly been welcomed by the market and will play an important role in reducing Ireland’s carbon emissions".

"Naturally, these changes require specialist knowledge so surveyors are further upskilling to help manage the costs on projects and bring them to construction as quickly as possible," she said. "Anyone planning a major commercial construction should seek to engage skilled specialists as early as possible.”

The standard, which promotes use of on-site renewable energy sources in buildings, requires all newly built structures to meet challenging new energy-reduction targets by December 2020.

The standard already is being enforced in all buildings acquired by public bodies since the start of 2019. It seeks to boost the energy efficiency of commercial buildings by 80pc and residential buildings by 25pc versus previous regulations.

"Changes to building regulations have increased energy efficiency across commercial and residential buildings, which are requiring more specialist machinery installations," the SCSI said.

"The demand to be able to advise and budget for these systems has grown significantly and will continue to grow."

The society said projects designed before Irish enactment of the NZEB standard but not yet built were being redesigned, driving up costs. And some vendors were seeking to "future proof" their new developments by making them even more energy-efficient than current requirements.

Such developers, it said, "are willing to stomach increased construction costs for the prospect of future savings".

The SCSI survey found costs rising more quickly in Dublin and Leinster than in the rest of Ireland. It forecast that costs for Dublin and Leinster construction, already 3.5pc higher in the first half of 2019, would increase by 6.7pc by the end of the year.

Cost increases for the first six months of 2019 were running at 2.5pc in Munster and 3.2pc in Connaught and Ulster, with expectations of reaching 5pc and 6.5pc respectively by year's end.

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