Northern Ireland construction starts are expected to rise by 9% to £1.4bn by 2026 according to industry-leading analyst Construction Information Services (CIS).
The insight and intelligence expert has released its widely anticipated Construction Industry forecast and estimates that construction will continue to grow in future years although at a slower rate initially.
The report predicts a rise of 1% in underlying starts – projects valued under £100m – in 2025 which will increase to 9% in 2026.
Growth across sectors is expected to vary, with 9 out of the 10 sectors analysed in the CIS forecast projected to experience increases of 5% or more in at least one of the next two years, signalling widespread but uneven expansion.
2024 saw relatively strong growth in all sectors, bar residential where housing completions in Northern Ireland look set to continue to decline. One major hurdle is the inability of the water infrastructure to support new housing developments. Approximately 19,000 homes are delayed due to these restrictions, exacerbating the housing crisis and slowing economic progress.
Encouragingly, planning applications for new housing developments have remained steady, with over 11,000 units submitted in 2024, reflecting optimism in the market. However, delivery remains a significant challenge due to systemic delays and underfunded infrastructure.
Dave Thompson, Vice President Ireland and Europe at CIS commented: “We anticipate a 20% decline in new housing investment this year, followed by a modest recovery in 2025. Encouragingly, the recent surge in new housing applications reflects growing confidence and renewed optimism in the housing market.
Additionally, the announcement by Infrastructure Minister John O’Dowd of an extra £31 million in funding for NI Water, with £19.5 million specifically earmarked to address critical wastewater system issues, is a positive step forward. This investment is vital for unlocking the potential for new housing developments and addressing long-standing infrastructure challenges.”
Beyond housing, Northern Ireland’s industrial and commercial construction sectors are showing signs of resilience and growth. In 2024, industrial project starts are forecast to match 2023’s record-high levels, driven by robust demand in manufacturing, logistics, and pharmaceutical facilities. While the pipeline for new planning applications and approvals may dip below 2023 levels, steady recovery is expected, with a projected sector value of £218m by 2025, £234m in 2026 and almost £250 million by 2027, underscoring its long-term potential.
Commercial construction is also on an upward trajectory, fuelled by a resurgence in office development. The sector is set to see a 104% increase in value, rising to £126 million in 2024, reflecting post-pandemic recovery and renewed urban business activity. This growth is anticipated to continue, with projections of £151m in 2025, £185m in 2026 and exceeding £200m by 2027.
The hospitality and sports/community facilities sectors are also showing resilience. Investment in hospitality developments is projected to rise by 111% in 2024, with over 300 hotel beds under construction or completed. Project starts are anticipated to hit £79m in 2025 and increase to £85m in 2026. Similarly, funding for sports and community facilities will see a 55% boost, reflecting increased local investment in grassroots and recreational projects. With a robust project pipeline, these sectors are projected to hit £58m in 2025, £62m in 2026 and nearly £70m in starts by 2027.
Education and medical construction are also positioned for steady growth, with delayed school and hospital projects set to resume as funding stabilises. These sectors provide vital opportunities for diversification and economic stimulus.
Allan Wilén, Economics Director commented: “The industrial and commercial sectors are bright spots in Northern Ireland’s construction landscape. With industrial starts holding steady and commercial activity on the rise, these sectors are driving diversification and economic resilience. However, sustained growth will require collaborative solutions to address planning bottlenecks and ensure the funding stability needed to unlock the region’s full potential. The resilience we’re seeing is a testament to the innovation and determination within the industry.”
As Northern Ireland’s construction sector faces pivotal years ahead, a strategic focus on diversification, sustainability, and collaboration will be key to overcoming challenges and seizing growth opportunities across sectors. The progress in industrial and commercial projects highlights the potential for a brighter, more robust future.