Posted on March 5, 2025
- Irish market bucks EU trend with 3% economy growth forecast for 2025, supporting a construction recovery
- New coalition government expected to continue investment programmes focused on housing crisis and infrastructure shortfall
- Caution over early tax and trade policy pursued by the US under President Trump
- Booming European data centre market an attractive market for the brightest and best of Irish construction
The Irish construction sector is poised for a recovery in 2025, driven by a resilient domestic economy that’s expected to grow at 3% and a renewed focus on infrastructure investment. According to a new market analysis report from leading global consultancy Arcadis, a potential 2-3% growth in domestic demand and fixed capital formation will provide a stronger platform for construction activity compared to EU peers, helping the sector rebound after a weak 2024.
The positive outlook is detailed in the launch of the inaugural Arcadis Market View for Ireland, offering key insights into investment trends, economic risks, and emerging opportunities in the country.
While the outlook is promising, risks remain. Ireland’s economy is exposed to overheating due to low unemployment and strong fiscal stimulus. Additionally, new tax and trade policies introduced by the United States under President Trump could create challenges for Ireland’s investment climate. The country’s strong economic ties to the US mean any shifts in tariffs or corporate tax regimes could impact foreign direct investment.
The government’s National Development Programme will accelerate in 2025, with hospital and housing projects progressing in procurement. The new coalition government – Fianna Fáil, Fine Gael, and the Regional Independent Group – has signalled continued investment in addressing the housing crisis. The private housing market is also set to recover following a difficult 2024.
Despite inflation concerns, Ireland’s booming data centre market remains a key area of opportunity, attracting top talent and investment in the construction sector. However, resource constraints in labour, housing, and energy may require careful economic management to maintain sustainable growth.
Two particularly noteworthy factors that have fed into Arcadis’s construction forecast include workload and construction earnings. On the former, construction activity is set to accelerate in 2025, with new build output expected to rise by 5%. This growth will be largely driven by housing demand, supported by a projected 10% increase in house completions and a significant uplift in government investment.
At the same time, despite the subdued market conditions in 2024, construction earnings have continued to rise, with labour costs emerging as a key driver of inflation. While worked hours saw little increase last year, weekly earnings grew by as much as 14% year-on-year, with housebuilding leading the way and the civil engineering sector lagging behind. With workload growth forecast to strengthen in 2025, wage inflation is likely to persist, further adding to cost pressures across the industry.
Fintan Kenny, Director at Arcadis Ireland, said:
“The launch of our first Arcadis Market View for Ireland comes at a pivotal moment for the country’s construction sector. With strong domestic demand, increasing public investment, and a growing workforce, 2025 presents a positive outlook for the industry.”
“However, while Ireland’s economy is outperforming many of its EU peers, challenges remain, including overheating risks, supply constraints, and external pressures from shifting global trade policies.”
“The election of a new government and the evolving international landscape will require careful navigation, but with the right strategic planning, Ireland is well-positioned to capitalise on its strengths and drive sustainable growth.”
