Soaring inflation will hit multinational employers’ plans to build or expand facilities in the Republic this year, surveyors warn in a new report.
Irish-based global surveyors’ firm Linesight predicts that the Ukraine war and rising energy costs will drive further increases in prices for key building materials including steel, timber and copper.
“New data centre and life sciences projects are set to be affected by the price surge,” Linesight warned in a report published on Tuesday.
This will exacerbate existing delays faced by such developments, including bottlenecks in supplies and materials, labour shortages, increased transport costs and logistics problems, the firm adds.
Linesight’s Construction Insights and Commodity Report calculates that Irish builders will have to increase the price at which they bid for contracts by 9.5 per cent to cover likely rises in their costs.
Russia’s invasion of Ukraine has hit steel supplies, as both countries are important suppliers of the material to the EU, according to Lineisight.
The firm estimates that prices for steel rebar, which is used to reinforce concrete, making it important for commercial construction, will increase 10.1 per cent this year to €819 per tonne. Flat steel prices will rise 8.7 per cent to €832 per tonne.
The Russia-Ukraine conflict will drive copper prices up 13.2 per cent to €9,252 per tonne.
Supply squeezes that had been expected to ease this year added more than 40 per cent to the cost of copper in 2021.
Concrete prices are set to grow 7.1 per cent to €75 a cubic metre, according to the firm’s predictions.
Builders also face further price hikes for timber, which was hit by domestic shortages blamed on licensing delays over the last two years.
Its cost will increase by another 9.3 per cent this year to €106.80 a metre, says Linesight.
Stephen Ashe, Linesight’s senior director, Europe, points out that construction was expected to rebound in 2022 following two difficult years.
“However, downside risks exist with the volatility in material prices returning and supply chain disruptions remaining, driven by the Russia-Ukraine conflict,” he says.
Mr Ashe adds that the price easing previously expected to follow the fallout from Covid-19 has not materialised.
Linesight, which has its headquarters in Dublin, manages building projects for data centres, pharmaceutical manufacturers, technology companies and a range of other industries in 24 countries.