The year in review: Northern Ireland's construction sector in 2024

In 2023, our Ireland Annual Review highlighted the opportunities NI’s unique position at the juncture of Great Britain, Europe, and the rest of the world offered — if only political stability could be secured. “If there was functioning government,” we said, “then all pieces of the jigsaw would be in place for a highly successful growth economy.”

Power sharing was finally reinstated in Stormont in February 2024. This year’s construction output figures bear our prediction out: it became a year of positive economic expansion. After years of volatility and high inflation, tender price inflation stabilised in 2024 to more normal levels aligned to that in the wider economy, at an annualised rate of 1.8 per cent after two years of abnormally high tender price inflation (2023: 9 per cent, 2022: 12 per cent).

A can-do, forward-thinking attitude is taking hold in both the public and private sectors. Projects long put on ice are being integrated into wider, all-island programmes of long-term work. Freed from political stalemate, the country is free to plan ahead.

This year's construction output figures bear our prediction out: it became a year of positive economic expansion.

Public Sector

Transport

In October 2024, Belfast’s new £340 million Grand Central train station opened. The biggest transportation hub in Ireland, the station concentrates the capital’s rail services into one major site. Hourly services now run between Belfast and Dublin, enabling workers to live in one city and work in the other.

There are further ambitions to develop an all-island rail network, which would require cross-border state investment in the billions. In July 2024, the Department of Transport in Ireland and the Department for Infrastructure (DfI) in Northern Ireland published an All-Island Strategic Rail Review, calling for additional track capacity, electrification, increased speeds, and higher service frequencies.

The strategy involves the construction of new rail lines, particularly in the North Midlands and North West, widening accessibility and connectivity. The Review estimates that the capital cost of implementing all the recommendations by 2050 is €35bn-€37 billion/£29-£31 billion (2023 prices).

The Review also recommends reopening the railway line between Portadown and Armagh. Prior to publication, we were commissioned to conduct an in-depth feasibility study, which concluded that it is both technically deliverable and operationally feasible to reopen the line. Now that the feasibility study is complete, we’re currently working with our partners SLC Rail on a more detailed study for Translink to develop the Strategic Outline Case for the scheme.

There is a major opportunity to boost economic growth and safety by improving the country’s rural and main arterial roads. 2024 saw confirmation of the £1.2 billion A5 dual carriageway upgrade, and the release of a new state road safety strategy.

Healthcare

Belfast’s £97 million Royal Jubilee Maternity Hospital completed construction in 2024. AECOM acted as lead architect with Isherwood + Ellis on the hospital. It is designed to meet the demands of the NI’s Maternity Strategy, which calls for concerted, multiagency approaches to improve pregnancy outcomes and reduce health inequalities. The hospital will serve an estimated 5,000 women each year.

We are also due to begin on site in January 2025 for the New Children’s Hospital in Belfast. Acting as lead architect, these two hospitals will provide integrated, comprehensive care from pregnancy, to birth and into childhood.

In Derry, Ulster University is lobbying for an expansion of its new medical school, which was completed in 2021. NI has a shortfall of GPs and medical doctors, and expansion of the facilities to include research space and to enable more students to study is included as a key project under the Derry’s state-funded £300 million, 15-year City Deal.

Education

There is a focus on raising attainment levels in young people in NI, with the education minister announcing plans in 2024 for compulsory education or training until the age of 18. Meanwhile, the Shared Island Fund is investing £20 million in 2024-2025 in a cross-border initiative to reduce educational disadvantages in 15 areas across NI, advocating for a “whole community and place-based approach.”

NI’s education authority is out to tender for construction consultancy services for a number of new schools, signalling significant investment into education over the next decade. Should the government choose to seize it, there is an opportunity here for a cohesive, long-term programme of work.

A can-do, forward-thinking attitude is taking hold in both the public and private sectors. Freed from political stalemate, the country is free to plan ahead.

Energy

District heat networks powered by geothermal energy offer users the opportunity to benefit from low-cost, renewable sources of heat. Northern Ireland currently has a limited number (estimated to be about 120) of small heat networks, but its potential in the country is huge — a topic we explored in last year’s report.

Awareness of district heating’s potential applications in NI is rising. The Department for the Economy is proposing to establish a regulatory framework for heat networks. Meanwhile, in September 2024, Belfast City Council published NI’s first Local Area Energy Plan (LAEP). The plan names the establishment of a Belfast district heat network as one of five main priorities.

AECOM is carrying out a feasibility study and heat mapping exercise for a district heat network for Belfast. Commissioned by the City Council, the study will examine the potential for harnessing heat from river source heat pumps, plus potential waste heat from the nascent hydrogen generation industry in Belfast port.

Water

Northern Ireland's water and wastewater infrastructure urgently requires substantial capital investment and modernisation to meet the needs of its citizens and drive economic growth. Enhanced funding and a strategic focus on developing climate-resilient water systems are essential. As NI Water has highlighted, the region faces an unprecedented challenge where insufficient infrastructure could limit economic opportunities and tourism, while posing risks to the natural environment and public health.

NI Water is currently undertaking a six-year business plan that necessitates over £2.1 billion in investments to address these critical issues. A central component of this plan is the Living With Water Programme (LWWP), led by the Department for Infrastructure (DfI). This ambitious initiative aims to unite government stakeholders to create a long-term strategy for drainage and wastewater management in the Greater Belfast area.

The LWWP focuses on three essential objectives: flood protection, environmental enhancement, and economic growth. Despite NI Water’s readiness and the expertise available through its professional services and construction supply chain, a significant funding gap and the absence of a multi-annual budget threaten the success of this crucial programme. This uncertainty jeopardises the ability to effectively secure and utilise resources necessary for the modernisation and sustainable development of infrastructure critical to Northern Ireland’s environmental and economic future.

AECOM, as a key partner in this endeavour, has significantly contributed to the LWWP's development over its 12-year span. AECOM has supported several key initiatives for NI Water, including the development of blue-green and nature-based solutions and proposals for major upgrades to the Kinnegar Wastewater Treatment Works and Sydenham Wastewater Pumping Station.

These projects are vital for addressing wastewater capacity challenges and facilitating sustainable development in the Belfast area, underscoring the importance of cohesive planning and investment in securing a resilient and prosperous future for Northern Ireland.

Private Sector

Residential

Housing construction output bucked otherwise positive trends and fell in 2024, by 5 per cent. There is a legacy of underinvestment in the supporting infrastructure networks required to enable housebuilding. Ageing drainage and wastewater infrastructure are the biggest bottlenecks, which if invested in could unlock the house building market. As a result of constrained supply, house prices rose 6.4 per cent between Q2 2023 and Q2 2024, significantly higher than the rest of the UK market.

The Belfast Agenda sets out a plan to add an additional 66,000 residents and 31,600 homes to the city centre to boost economic health and productivity in the capital by 2035. At present, only an estimated 7,764 people reside in the city centre.

As a result of constrained supply, house prices rose 6.4 per cent between Q2 2023 and Q2 2024, significantly higher than the rest of the UK market.

Major investment in homes, connectivity, and social infrastructure will be required over the next decade to realise this goal. Housebuilding and associated infrastructure, and the call for greater investment in cultural, retail, and hospitality provision in the city offer significant, long-term opportunities for both public and private sector spending.

Retail

Footfall in Belfast city centre increased 3.7 per cent YoY. Growing tourism — both from ROI and internationally, supported by cruise ship dockings — is giving supporting sectors confidence to invest in bricks-and-mortar outposts in the city. A string of new premium hotels, restaurants, shops, and bars opened in 2024.

Belfast hotels had their bestever month in June, with revenue per available room hitting an all-time high. Apple and H&M opened new stores in Belfast’s new shopping zone The Keep, indicating international confidence in the city’s retail prospects.

Across the country, cross-border tourism between ROI and NI has more than tripled over the past decade, representing a long-term economic opportunity for both markets, according to 2024 research by the University of Dublin and the University of Ulster. The universities called for the island of Ireland “to build a single tourism offering: in marketing, visa-requirements, tax and regional development policy, and perhaps most crucially, in the perception of the visitor."

Belfast hotels had their best-ever month in June, with revenue per available room hitting and all-time high. Apple and H&M opened new stores in Belfast's new shopping zone The Keep, indicating international confidence in the city's retail prospects.

Construction output

Northern Ireland's construction industry enjoyed double-digit gains over the past year, with a 10.5 per cent increase in annual output from Q2 2023-Q2 2024. New work increased by 6.3 per cent and repair/maintenance rose 17.7 per cent YoY. This growth is linked to stability both in the industry and the wider economy across the island.

Drilling down into sub-sectors, infrastructure saw particularly strong activity (+22.1 per cent YoY), driven by both public and private sectors (see Figure 1).

Northern Ireland's construction industry enjoyed double-digit gains over the past year, with a 10.5 per cent increase in annual output from Q2 2023-Q2 2024.

Manufacturing

NI has an exceptionally strong capability in plant, machinery, and vehicles production for the export market. NI is capitalising on its centuries-old capabilities in docks-based physical exports, by retooling and adapting its offerings to meet decarbonisation demands.

The nation is now a global leader in building electric and hydrogen-powered public transport: Ballymena-based Wrightbus sold £500 million of new electric buses to UK transport group Go-Ahead in October 2024 alone. Bombardier’s historic Belfast site is now home to a purpose-built production facility making carbon-fibre aviation wings. Meanwhile, legacy Belfast shipyard business Harland & Wolff is set to begin fulfilling a £1.6 billion shipbuilding contract for the Royal Navy.

Other activities in the harbour include building turbines for the renewable energy industry and Artemis Technologies developing battery-powered vessels.

Repair and maintenance

Repair and maintenance growth is primarily driven by two subsectors: domestic insulation and thermal upgrades, and the Belfast commercial market. In the latter, existing vacant grade B offices are being retrofitted to meet the demands of incoming businesses seeking high-quality, sustainable office space.

Office uptake is buoyed by strong service industry activity. Northern Ireland’s demographics support this activity. It has the most highly educated workforce in the UK outside of London.) and the youngest population in the UK, with a median age of 40. Belfast is carving out a niche as a home for fintechs, security and technology startups, which can draw upon a pool of talent from local universities which invested early in these fields.

That said, rents for best-in-class offices have risen only slightly year-on-year from £25 to £25.50 per sq ft, lagging behind other UK regional cities such as Bristol and Edinburgh (£40+ per sq ft). Coworking spaces are also cheaper than the UK average. With rents insufficient to support new build, refurbishments of existing stock are a more compelling proposition, both from a cost and carbon perspective.

Digital and creative

NI is gaining prominence as a hub for the creative, tech, and digital sector.

Already a key physical filming location for the TV and film industry, in 2024 Studio Ulster, a £25.2 million virtual production studio, opened at Belfast’s Giant’s Park. It was funded via Belfast’s City Deal.

Meanwhile, business incubator Catalyst and Deloitte partnered to open a new 90-desk innovation hub and co-working space for start-ups and scaling companies in Belfast city centre in 2024.

It is set to be joined in 2027 by Queen’s University’s Momentum One Zero, a £70 million innovation centre in the Titanic Quarter which was granted full planning permission by Belfast City Council in late 2024. The centre will focus on digital innovation including cyber security and artificial intelligence.

Digital infrastructure is rolling out to support this growth. Belfast is in the first phase of launching business-ready 5G networks, deploying £3.8 million in state funding.

Climate action

Solving for carbon

NI has historically fallen behind the rest of the UK in decarbonising, primarily due to its strong agricultural industry.

There is evidence however, that NI’s environmental footprint is improving. 2022 saw a 3 per cent decrease in CO2 emissions compared with 2021. The longer-term trend showed a decrease of 26.4 per cent compared with emissions in 1990.

Use of fossil fuels is slowly declining. At present, NI sources around 45 per cent of its power from renewable sources, compared to around 51.6 per cent across the wider UK. Long-requested regulatory support for decarbonisation is also now in place as of 2023, but there is a sense that its demands have yet to be firmly applied by government.

Instead, individual businesses are forging ahead with their own decarbonisation efforts. Our sustainability teams are supporting NI companies navigate legal reporting requirements on climate-related risks and opportunities as part of the UK government’s 2022 regulations. This work involves assessing companies' current alignment with the Task Force on Climate-Related Financial Disclosures (TCFD) reporting requirements, identifying gaps in current public disclosure, and providing guidance to strengthen their climate resilience and reporting practices.

The same can be said for regional councils and institutions. Queen’s University Belfast, for example, is adopting Passivhaus principles across its new building work. In Enniskillen, County Fermanagh, AECOM is acting as project and cost manager for a new Passivhaus leisure centre, one of a handful globally to meet the stringent environmental criteria. Fermanagh and Omagh District Council are establishing themselves as a net zero carbon centre of excellence.

This proactive mindset may find central government playing catch up to smaller, regional leaders driving net zero approaches.

In 2024, we were proud that implementation of ScopeX^TM, our global carbon management approach, received regional certification in the UK and Ireland from the British Standards Institute, via its PAS 2080 standard. PAS 2080 outlines best practice for managing carbon in buildings and infrastructure development. It is widely recognised as the global industry decarbonisation standard.

Environment

Biodiversity emerged in 2024 as a key area of concern in NI — but also a chance for collaboration and technology to make lasting improvements to both NI’s abundant natural and manmade resources and habitats.

A report by the Office for Environmental Protection found, among other factors, that poor sewage networks and the nation’s centuries-long dependence on agriculture has led to depleted land and shifts in water and soil composition. There has been a 50 per cent reduction in biodiversity in NI since the 1970s, the report stated.

The infrastructure sector has a key role to play in conserving and restoring ecosystems. To help drive change, we worked with the International Federation of Consulting Engineers (FIDIC) and the World Wide Fund for Nature (WWF) to create the ‘Playbook for Nature Positive Infrastructure Development’. The open access playbook supports industry to understand how nature-based solutions can be integrated into infrastructure projects to ensure that nature and biodiversity are at the heart of decision-making and design.

Rather than taking a theoretical approach, it is built around the analysis of nearly 200 existing projects implemented around the world and allows readers to consider solutions by sectors, by benefits or by types of nature-positive infrastructure solutions. It also includes case studies from around the world of some exciting and successful projects that have already been implemented.

Construction industry outlook for 2025

For the last four years, NI has operated under a short-term economic mindset: experiencing hand-to-mouth, six-to-twelve-month budgets. The nation is soon set to receive a budget that will last three to five years. NI Finance Minister Caoimhe Archibald published a Budget Sustainability Plan in October 2024, which outlined plans for a forthcoming Executive Budget. A longer-term, comprehensive spending plan will give both public and private sector the certainty they need to greenlight construction activity — and perhaps consider taking a programmatic approach to their pipeline of projects, if relevant.

The UK’s Autumn 2024 Budget included an £18.2 billion settlement for the Northern Ireland Executive in 2025/26 — the largest in real terms in the history of devolution. This included an unexpected £1.5 billion in additional funding through the Treasury’s Barnett funding formula for devolved nations.

This should help reduce Stormont’s departmental overspend, which we noted as a concern in 2023’s annual review. Executive departments were understood to have over-allocated budgets by £767 million as of September 2024. “Addressing over-commitments” is the “top priority” for ministers in 2025, Finance Minister Archibald said.

NI’s four City and Growth Deals, totalling £1.3 billion in capital investment over the next 10-15 years, were also confirmed to go ahead in the 2024 Westminster Autumn Budget.

Despite the budgeting challenges, at the start of 2025 there is a spring in the step of Northern Ireland. With the restoration of government, the release of ambitious, long-term state strategies and funding, and an economic shift towards more stable interest and inflation growth, the private sector has a more stable place to land its capital than just a year ago.

With NI's sense of economic buoyancy and the positive project pipeline we are witnessing, we expect to see shifts in the construction labour market.

Construction costs and tender prices for 2025

Materials cost inflation stabilised in 2024, in line with the wider UK and global markets, but price changes varied widely across different products. We expect to see this trend continue into 2025.

With NI's sense of economic buoyancy and the positive project pipeline we are witnessing, we expect to see shifts in the construction labour market. In recent years, both ROI and the wider UK have benefitted from ready access to NI labour for their construction projects, but supply is starting to shrink. There is a need for an estimated additional 5,200 construction workers in NI between 2024-2028.

The NI labour market may increasingly opt to take advantage of the growing project pipeline in its home country, potentially creating constraints in other markets which have historically lent on NI to meet their labour needs.

We expect tender price inflation will reflect a tightening labour market, which may fuel wage inflation. Growing confidence in the wider UK market may also drive activity and thus demand for services: the clarity provided by Labour’s first Budget in late 2024 should unlock state capital investment in the year ahead.

To learn our exact 2025 tender price inflation forecast, please download the report using the form at the top of the page.