Irish construction market readies for growth with expanded workforce and stable supply chain, but inflation risks remain
Arcadis, the leading global design and consultancy firm for natural and built assets, today released its Spring 2026 Ireland Market View Report. The latest analysis provides a comprehensive overview of macroeconomic trends, sector performance, and future projections for the Irish construction market, highlighting both emerging opportunities and key risks for the year ahead.
After a turbulent end to 2025, which saw output contract across all major sectors, Ireland’s construction industry is positioned for recovery. Economic forecasts anticipate a return to steady, predictable growth, underpinned by a robust workforce and increased public investment as outlined in the National Development Plan (NDP). However, ongoing external shocks, including the Iran war and implementation of the EU Carbon Border Adjustment Mechanism (CBAM), are expected to impact material costs and inflation in the near term.
Key Insights from the Spring 2026 Ireland Market View:
Housing and Public Investment:
The NDP is set to increase public capital investment by 11% in 2026, with €7.2 billion allocated for housing. Housing starts in late 2025 suggest output is stabilising at around 36,000 units per year, but a significant ramp-up is required to meet the government’s target of 50,000 completions annually by 2030.
Procurement is underway for large-scale programmes, including MetroLink and the Water Supply Project, but market impact will take time to materialise.
Sector Performance and Market Sentiment:
Construction output grew 4.9% year-on-year to Q4 2025 but slowed sharply in the second half of the year. Civil engineering and residential sectors both saw contraction, though confidence in the housing market is improving as new starts recover.
Only 20% of contractors expect growth in Q1 2026, down from over 30% a year ago, reflecting ongoing uncertainty.
Inflation and Supply Chain Pressures:
Inflation eased in 2025 but is expected to range between 3-5% in 2026 and rise to 4-6% by 2027, as public investment accelerates and CBAM impacts feed through supply chains.
The Iran war has caused volatility in energy and materials markets, adding to ongoing risks for cost inflation. CBAM is already contributing to price increases for steel, cement, and other key inputs.
Labour and Contractor Market:
The construction workforce grew by 9.1% in 2025, reaching 193,000 - the highest since 2012 - providing valuable spare capacity ahead of the anticipated upswing.
Wage growth in construction slowed to 0.9% YoY by Q4 2025, offering a temporary reprieve from cost pressures, but skills shortages could re-emerge as NDP delivery accelerates from 2027.
Data Centre and Infrastructure Outlook:
The lifting of the data centre connections moratorium and adoption of new energy models are expected to catalyse further investment in this critical sector, reinforcing Ireland’s position as a leading European data centre destination.
Simon Rawlinson, Head of Strategic Research and Insight - Arcadis, commented on the findings:
“Ireland’s construction sector is poised for a new wave of growth as public investment ramps up and the market stabilises. However, persistent uncertainty in global supply chains and energy markets means clients and contractors must plan carefully for rising costs and delivery risks. Our analysis shows that, with its expanded workforce and policy reforms, Ireland is well placed to seize the opportunities ahead, but the sector must remain agile to navigate the evolving landscape.”
